Tax amnesties fail in bid to give HMRC a revenue boost

Two tax amnesties designed to swell the coffers of HM Revenue & Customs (HMRC) have fallen several hundred million pounds short of what similar initiatives in the past have raised, a leading accountant warned today.

The law firm McGrigors said two schemes launched this year – the new disclosure opportunity (NDO) and the tax health plan (THP) – had netted just £91m between them, a fifth of the £450m raised by the first such amnesty in 2007.

Tax amnesties are designed to give those who have an undeclared tax liability an opportunity to settle what they owe with reduced levels of penalties and fines, and to save HMRC money on investigations.

The data showed that the 2007 amnesty yielded 45,000 disclosures, worth an average of £10,000 each. While the latest amnesties were offered on broadly similar terms, the NDO attracted just 5,500 disclosures, averaging £14,500, while the THP, an amnesty available to health professionals, received just 1,500 disclosures, with an average of just £6,200 each.

Phil Berwick, the director of tax investigations at McGrigors, said: "These figures will be hugely disappointing for the HMRC. With every amnesty there seems to be diminishing returns... [though] HMRC will claim these amnesties have been successful because the yields are high for very little spend."

Mr Berwick also said that repeating amnesties in the future could prove counter-productive. "The threat that tax evaders were drinking in the last-chance saloon prompted a decent response to the first amnesty in 2007, but with every subsequent amnesty, the fear of punishment has diminished."