Brown Hopes To Secure Extra £1.7 Billion Revenue From New Compliance Campaign

by Jason Gorringe, Tax-News.com, London

23 March 2004

Encouraged by the recent success of an offshore tax shelter crackdown, UK Chancellor of the Exchequer Gordon Brown is reported to have set aside over £150 million in this year’s budget to be spent on enforcing tax compliance.

Last year saw Brown channel £66 million into a campaign by the Revenue to examine offshore tax shelters, which the tax authority says is on target to bring in £1.6 billion in additional tax revenue over three years.

The Independent newspaper has reported that buoyed by this apparent success, the Chancellor has apportioned some £155 million to be used in a similar campaign enforcing general tax compliance. It is thought that the Treasury is expecting a further £1.7 billion in extra tax receipts to flow into its coffers as a result of the initiative.

According to the Independent, the focus will be placed on larger firms and individuals with ‘complex’ tax affairs. It is understood that the Revenue has defined ‘complex’ tax affairs as anybody earning over £300,000 per year.

Whilst the increase in spending on compliance is in harmony with the heavy emphasis on anti-tax avoidance measures in last week’s budget, it would also appear to run counter to the massive cost savings announced as a result of the planned merger between the Revenue and Customs. The fact that Customs is taking on an additional 1,000 staff to tackle a 15.7% revenue gap between what it takes and what it ought to take in VAT receipts, also appears to contradict government claims that over 10,000 jobs will be axed when the departments merge, generating massive cost savings.

Observers have pointed out that it is unclear what powers officers from the new ‘Integrated Tax Department’ will have in terms of arrest, search and seizure of assets. Currently, Customs officers have the right to raid premises, although Revenue tax inspectors do not possess similar powers.

Recommended