As International Adviser has reported:
According to data released to UK accountancy firm UHY Hacker Young, HMRC's yield from compliance work related to personal tax returns was £609m in 2012-2013, up from £441m in the previous year.
The accountancy firm said that one area in particular where HMRC has collected a significant proportion of its additional revenue is by investigating the tax affairs of those in the highest-paying tax band.
UHY Hacker Young explained that HMRC's so-called “Affluent Team” scrutinises the tax affairs of around 300,000 people with incomes over £150,000 or wealth between £2.5m and £20m, and is expected to recover £586m in unpaid taxes by 2015.
Earlier this year, HMRC announced that it was expanding its Affluent Team with the hiring of 100 additional inspectors. The unit brought in £75m in 2012-13 and is expected to bring in the same amount — if not more — in 2013-14.
Now of course I welcome this. I'm also aware that this data cannot be extrapolated easily, but the message is very clear. 100 new inspectors have paid handsome dividends. I have always said they would.
But in that case why not many, many, more, because what is certain is that only the tip of the iceberg is being tackled right now.
The only illogical course of action right now is not to be recruiting, heavily.
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I’d imagine that they will recruiting in the not too distant future…. in the form of outsourcing to the private sector.
I believe HMRC has just issued a prior information notice regarding using the private sector to undertake compliance activities with regards to Tax Credits
Looks as if they already are.
According to Accountancy Age they’re recruiting 120 this year and recruited 200 last year.
http://www.accountancyage.com/aa/news/2296749/hmrc-in-the-hunt-for-graduate-tax-trainees
Do the Affluent Team look for those people who don’t declare any income or declare income under £150,000, but that should be over £150,000 ?
They are currently recruiting 120 more graduates for their TPDP programme and just recruited around 100 more inspectors for Large Business Tax…
But they’re losing more than that through retirement….
Do you know of any figures on that? Tried to find some but couldn’t. Seems highly likely, judging by comments from friends of mine who have worked there. However, you can’t base judgement on headline figures alone – I’d rather they recruited 100 really good inspectors than 500 mediocre ones.
ARC estimate recovery is £600k at a minimum per inspector
OK, but that doesn’t tell me what the quality is comparatively between who they’re hiring now and who they have hired in the last ten years. It also tells me nothing about the quality of the candidates they just hired. It’s not about always necessarily numbers of recruitment, it’s about quality.
Re my other question, do you know where/if actual figures are available about retirement from HMRC? I saw something quoted in the Telegraph but it was pretty vague.
Re outsourcing to the private sector, this is already happening in some countries. I was told by our Greek FD only recently that some accountancy firms are doing audits for the Greek tax authorities. I do not know how they are paying them, but the only sensible way in my mind would be to pay them success fees based on extra tax collected. But there has to be a big concern with this approach as regards impartiality – after all as a firm how could you possibly go to a client to get business on one day and potentially be tax auditing that client the next – And how could you work for the tax authority one day collecting tax and then be arguing for your client against an assessment the next day – It doesn’t compute. A bizarre concept and I wonder how long it will last.
I agree based on those numbers that there has to be a case for recruiting more staff, but clearly the law of diminishing returns will apply and one would assume this first lot of 100 staff has already tackled the biggest pot of extra revenue for HMRC.
Lawyers do this all the time (e.g. fund lawyers work for Investors one day and a Fund the next). Of course, you cannot work on both sides of the same transaction – but most professionals are essentially “guns for hire” who will work on a matter-by-matter basis. In some circumstances it can be a real boon to know both sides.
I’m sorry – but I see no way that is possible in accountancy
The market is different, so are the obligations and the conflicts which in accountancy are not transactional but general
Can you explain a little more? I thought this sort of conflict situation already existed with audits conducted by the Big 4? If you are subject to professional regulation and specified conflicts are avoided then what’s the issue?
Open your eyes!
The Big 4 conspicuously fail, often (including criminally) and regulation has no real impact on them
Please stop talking abstract nonsense and look at reality
As someone who is not an accountant, I am asking for explanation. Please stop abusing commenters and back up your assertions!
What are you asking for an explanation for?
@ AB – With your lawyer example you talk of not advising both sides of a particular trasnaction. So for example a lawyer couldn’t (or shouldn’t at least) advise both the buyer and seller in a buy-sell transaction.
I think what Richard is saying that the nature of accountancy itself means that advising a tax authority on anything – be it a transaction, a policy an interpretation of law, etc. – is intrinsically at conflict with that same acocuntancy frim advising clients – be they personal or companies – on tax matters.
And auditing has the same intrinsic conflict with an audting firm advising the same client on other matters – such as tax, policy, business advice or whatever.
You make the point that these conflicts are supposed to be controlled by regulation – but these are self governed by the acountancy bodies themselves, and as Richard points out many firms have been fined or taken to criminal court over failures in auditing practice, so it appears the self reguation is not working too well.
You summarise correctly