Tax administration

HMRC has promised that from 2026 it will transform the way it uses digital tools to tackle tax evasion and interface with taxpayers. With the clock ticking, here are five things we found out this year about how HMRC’s digital transformation – including Making Tax Digital – is going. (Number four will blow your mind…)

At the very moment the Chancellor was searching for fiscal headroom at last week’s Budget, just across Parliament Square UK ministers and representatives of some of the world’s most important offshore financial centres were presiding over another year of drift and broken promises on tackling offshore secrecy.

The Budget’s third-largest tax pledge relies on a UK tax authority that is suffering from recruitment delays and unfinished IT systems. Just 26 of 6,700 extra compliance/debt staff promised by Chancellor are so far in post. A key tax to counter digital giants’ profit-shifting will remain despite Trump pressure, but the Budget has missed opportunities to tackle abused corporate reliefs now as large as the child benefit budget.

Though it’s been absent from the pre-Budget debate, the Chancellor’s second-biggest revenue-raising policy so far is a plan to boost HMRC’s personnel & systems: recruiting 6,700 more staff to chase an extra £15.5 billion of evaded tax and tax debts. Yet TaxWatch has found that just 26 of these promised new staff are yet in post, calling into question a key plank of the government’s tax and spend plans.

In the run-up to a make-or-break Budget, TaxWatch’s new State of Tax Administration report takes a deep dive into how HMRC has been running the tax system over the last year.

Successive governments have rejected calls for a tax advice regulator and minimum professional standards, which exist in many other countries from Australia to Germany. It’s high time that UK taxpayers got similar protections.

With limited resources, how should the UK prioritise different types and targets of tax enforcement?

Stronger powers against ‘enablers’ – those who design and enable aggressive tax avoidance and evasion – are back on the table once again. But new figures show that existing powers are still not being used.

New figures on UK tax enforcement show that Pandora Papers leaks can’t supplant properly available information about who really owns offshore companies.

Quietly buried in HMRC spreadsheets released today is the news that the UK Tax Gap is consistently much bigger than HMRC previously said. New evidence suggests that the government may be under-estimating by several billion pounds the amount of income hidden offshore, and non-compliance amongst the largest and wealthiest taxpayers.