Government money handed to HM Revenue & Customs (HMRC) to blitz tax avoidance has given a return of more than 100 times the investment.
The incoming coalition government pledged £900 million to bolster HMRC’s compliance departments in 2011.
The money was spent on sophisticated technology and recruiting specialist investigators.
Since then, HMRC has collected around £100 billion from compliance inquiries and prosecuted more than 2,650 crooks for tax evasion, compared to about 500 in the previous years.
However, MPs have expressed concern that HMRC has shed around 40% of staff during the past 10 years and that the reduction may be severely affecting efficiency and operations.
HMRC jobs concern
Many of the jobs have gone due to HMRC moving tax administration for companies and individuals online.
Chancellor George Osborne has shown his support for the tax authority by clearing the way for a raft of new legislation aimed at making tax evasion harder.
The next move expected in Budget 2015 are tough laws aimed at cracking down on advisers who give taxpayers advice about how to hide their cash and assets from HMRC so they pay less tax than they should.
These new laws come in the wake of HMRC winning legal cases against tax avoidance partnerships designed to generate losses to offset against billions of pounds of tax.
Many of these partnerships were joined by wealthy sports stars and celebrities.
Other laws which have helped HMRC protect tax revenues for the government include a major legal shift in the way tax avoidance is prosecuted.
Change of tack
Instead of HMRC having to identify and prove a tax avoidance scheme breaks the law, anyone using a tax avoidance scheme must now pay the tax they state the scheme saves upfront. Then, they have to prove to HMRC that the scheme works.
“This has protected billions in tax and been a major sea change in tax collection,” said an HMRC spokesman.
“In the past, HMRC sometimes spent a decade tracking and closing these schemes, but the onus has now shifted to them to prove that their efforts not to pay tax are legal and really work and are not just a sham aimed at not paying tax that is rightfully due.”
Another new measure expected in the Budget is a rule allowing HMRC to publicly name and shame serial tax avoiders who refuse to pay up.
