Seeing the wood from the trees: Putting HMRC wealthy compliance statistics in context

by | Feb 21, 2024

It’s good to see national newspapers showing an interest in HMRC performance data and raising important issues about properly funding our tax authority. However, a recent article in The Guardian about trends in case numbers opened by a niche HMRC team requires a bit of context to judge whether the question it poses is the correct one.

The small, very specialist, team dealing with Offshore, Corporate and Wealthy (OCW) cases within their Fraud Investigation Service (FIS) comprises less than 1.5% of HMRC’s entire compliance staff (327 out of 28,000 in 2022-23). They deal with the most complex and egregious fraud and avoidance cases involving issues that cut across different taxes and where there are often combinations of individuals, companies, and offshore matters that require a multidisciplinary approach – the composition of the team’s workload can vary over time.

Focusing on the number of cases opened between selected years is tricky. The article states that new cases fell from 1,417 in 2018-19 to 627 in 2022-23, but this almost certainly misses fluctuations across the years. These complex cases often take multiple years to reach a conclusion, so a higher level of cases opened in one year increases the workload for a number of subsequent years, and the rate of new cases will likely fall. This doesn’t indicate how much work is being undertaken by the small team.

Casework is also affected by external factors. The onset of the Covid-19 pandemic disrupted the ways teams across the civil service worked especially in 2020-21, for example.

The other likely factor which provides context for greater offshore cases during the peak year of 2018-19 was a number of offshore disclosure facilities which operated from 2009 to 2015, followed by the Requirement to Correct (RTC) for those taxpayers with previously undeclared offshore incomes or assets. These facilities intended to identify and bring forward cases for resolution, partly to reduce compliance enquiries in later years. By 2022-23, the cases opened during 2017-18 and 2018-19 will have been concluded.

However, the recognition of HMRC’s continuing failure to publish an offshore tax gap is important as, without that information, it’s impossible to know how successful HMRC is being in tackling issues relating to offshore assets, which would largely be dealt with by this team.

Further analysis of similar trends can be found in TaxWatch’s State of Tax Administration report.

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