Get-tough HMRC raises billions

A "no mercy" strategy by HM Revenue & Customs since 2005 has resulted in a significant uplift in revenues clawed back from tax evaders, but concerns have been raised over its "draconian powers" and a "disproportionate" amount of resources being spent investigating smaller companies.

The accountancy firm UHY Hacker Young said that HMRC had managed to collect some £39.5bn through its tax enquiries and other compliance work since the organisation came into existence five years ago, following the merger between HM Customs & Excise and the Inland Revenue.

In the latest year to 31 March 2009, HMRC grew the amount retrieved by tax investigations by a total of 7 per cent to £12.1bn, compared to the previous year, although this figure represents a 64 per cent leap on the revenues retrieved in the organisation's first year from April 2005.

UHY Hacker Young attributed this five-year uplift to HMRC continuously seeking "tougher and more intrusive powers" since it was established. It said the extra tax retrieved also reflects the growing number of mistakes made by taxpayers as the system becomes increasingly complicated.

Roy Maugham, tax partner at UHY Hacker Young, said: "The amount of money that HMRC is taking in through compliance work is huge, but this hasn't come without significant costs to innocent taxpayers."