The Spring Statement earmarked around £87m to be added to HMRC’s existing partnerships with private sector debt collection agencies to bring in £1.3bn over the next five years – a return of around £16 for every pound spent for UK public services and investment projects.
HMRC will also receive £4m in new funding to pilot a new test and learn programme with the private sector to improve the tax collection agency’s approach to recouping older unpaid tax debt. Ministers will decide whether to proceed with a larger exercise later this year based on the results of this test.
Reeves first announced measures to clamp down on tax evasion in the Budget last year, saying the plans would raise £6.5bn per year by the end of the forecast.
In today’s Spring Statement, she said: “Today I go further, continuing our investment in cutting-edge technology, investing in the HMRC’s capacity to crackdown on tax avoidance and setting out plans to increase the number of tax fraudsters charged every year by 20%.
“As I promised in the autumn, this statement does not contain any further tax increases. But when working people are paying their taxes while still struggling with the cost of living, it cannot be right that others are still evading what they rightly owe in tax.”
The Spring Statement also announced £100m in new funding for HMRC to recruit a further 500 compliance officers from April 2025. This will raise £241m in unpaid tax over the next five years.
Late payment penalties for VAT and Making Tax Digital for income tax self-assessment will increase to incentivise taxpayers to pay on time. This will be from 2% to 3% at 15 days, from 2% to 3% at 30 days, and from 4% to 10% from day 31. This will take effect from April 2025.
HMRC had already announced a reward scheme for “informants” earlier this month. The scheme will pay cash to people who report serious non-compliance in large corporates, wealthy individuals, and offshore and avoidance schemes.
The scheme will take inspiration from the successful US and Canadian models, rewarding informants with compensation linked to a percentage of any tax taken as a result of their actions.
This intensified crackdown on tax evasion is part of a broader fiscal strategy that includes welfare spending cuts and a £2.2bn increase in defence expenditure.
