As the furlough scheme comes to an end, HM Revenue & Customs (HMRC) is carrying out a rising number of tax investigations, aiming to tackle tax evasions in full force.
According to recent research, HMRC’s investigations managed to save £4 billion in taxes from being lost in the last quarter. The previous year is almost half of that figure at £2.2 billion.
Why are tax investigations rising?
During the Covid-19 pandemic, HMRC redistributed a large number of its employees to oversee the furlough scheme, meaning compliance work slowed down considerably as a result.
However, now that the furlough scheme has ended, HMRC can restore both the time and personnel required to conduct these investigations. In 2021, we have seen the campaign to prevent tax being lost start to elevate once more.
Kevin Igoe, Managing Director at PfP, said: “HMRC is showing it is determined not to let tax slip through the net – it will be pushing forward with full force in its tax investigations.
“It is no wonder that HMRC has stopped more tax from being lost now than at the same point last year – they will be under immense pressure to recoup revenue as the Government looks to offset the huge sums spent throughout the pandemic, as quickly as possible.”
Anyone who submits a tax return is a potential target. Due to the heightened pressure on HMRC, it’s important that businesses and individuals protect against the impact these investigations may have by ensuring they have the correct cover in place.
PfP also emphasised that HMRC helped avoid £870 million from being lost in the second quarter of 2020, jumping significantly to £4billion in the first quarter of 2021, more than four times greater.
Due to the amount invested in the Covid-19 support schemes, the Government’s aim to reimburse these funds is to be expected, ensuring the tax gap is as small as it can be.
So, how can you protect yourself?
When HMRC investigates it can drag on for a year or more, creating mounting costs and rocketing stress levels
Here at Davis Grant, we offer a tax enquiry fee protection, managing your case from start to finish, reducing stress and providing peace of mind.
Investing a small amount into our expert protection service now means that you will receive complete support if HMRC targets your business.
Read more about our tax investigation service, and contact our expert team today to find out how we can help.