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A new report has revealed that HMRC collected £4.9 billion in extra tax from investigations into small businesses and individuals in 2018-19 but only spent £309 million on staff to achieve that figure.

This extra tax included £1.2 billion from investigations into underpaid income tax.

HMRC’s individuals and small business compliance directorate manages the tax compliance of individuals and small businesses, which it defines as any company with fewer than 20 employees and an annual turnover below £10 million.

The report by law firm Pinsent Masons says that while HMRC’s focus is primarily on large companies, the high level of returns it has received from investigations at the other end of the scale means it may consider investing more into its team targeting this particular group of taxpayers.

A key area of focus for HMRC when targeting individuals is self-assessment tax returns. If HMRC identifies a mistake on a tax return, it may conduct an audit of returns filed in previous years, increasing the likelihood of finding further mistakes.

The tax body has a range of new data sources and civil powers at its disposal which have improved its ability to identify mistakes. It now receives data from more than 100 tax authorities worldwide and can use a range of powers to retrieve documents from taxpayers’ accountants and lawyers.

The report concludes that these figures will spur HMRC on to do more. This means that taxpayers can expect more attention and investigations in future and emphasises the importance of having tax returns filed by an experienced accountant.

If your business is subject to a tax investigation, it’s best to seek advice as soon as possible.

Haines Watts have dealt with many individuals and companies who have experienced differing levels of tax investigations, ranging from income tax, corporate tax and VAT to PAYE investigations.

Our tax team can help with the following:

  • Preparing and presenting information in correct formats
  • Communicating with HMRC
  • Attending meetings with HMRC on your behalf
  • Negotiating on settlements, interest and penalties
  • Maximising payment terms on your behalf

For more information, contact us via the details below.

Want to know more? Call us on 01905 612347 or email

About the author

Jonathan New

Jon is a senior tax manager responsible for the accounting needs of clients. His responsibilities are predominantly advisory based i.e. writing a report or giving my opinion on areas such as a company restructure or an incorporation. He also review’s the tax computations of the larger companies and groups as there can sometimes be reasonably complex issues that require a more comprehensive analysis.

In his spare time Jon enjoys playing and watching rugby, golf and cricket. I like cooking and experimenting with different cuisines and ingredients. However, what I love doing most outside work is spending time with my family and friends.

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