Investigations by UK tax authority HM Revenue and Customs into serious tax fraud and avoidance have decreased to their lowest number in six years, according to new figures.
Collectively, Code of Practice 8 and 9 cases fell from 1,091 in 2022-23 to 480 in 2023-24, the FT reported yesterday, November 10.
Meanwhile, Code of Practice 9 probes alone fell from 669 in 2019-20 to 268 in 2023-24, it is understood.
Code of Practice 8 investigations are usually used when HMRC suspects individuals or entities have underpaid taxes as a result of using complex tax avoidance arrangements or structures.
These investigations come under the remit of HMRC’s Fraud Investigation Service, unlike routine compliance checks.
HMRC uses Code of Practice 9 investigations in cases where it is suspected that serious tax fraud has been committed.
In these probes, HMRC uses the Contractual Disclosure Facility (CDF).
The CDF, which is operated by HMRC’s Fraud Investigation Service, offers individuals immunity from criminal prosecution over tax offences in return for full disclosure of tax fraud.
Staff retention and poor resourcing within HMRC are to blame for the drop-off, tax experts have reportedly told the FT.
HMRC has “deliberately focused” its investigations in recent years towards the “highest-harm and highest-value fraud, which means the number of these enquiries will change from year-to-year based on changing risks,” a spokesperson for the tax agency has reportedly said.
“The vast majority pay the tax that’s due and we use a range of civil and criminal powers to tackle those committing serious fraud,” they added.
The spokesperson also reportedly claimed that this compliance work protected £34 billion ($43.88 billion) of tax that would otherwise have been unpaid.
In her Budget statement in October, UK chancellor Rachel Reeves announced HMRC would hire 5,000 new compliance officers and undergo a technology overhaul.
The plans to boost HMRC would generate close to an additional £6.5 billion by the 2029/30 financial year, Reeves claimed.
Earlier this year, ITR reported on HMRC reporting £843.4 billion of tax revenue for 2023-24, the highest on record.
ITR has contacted HMRC for comment.
