HMRC reveals the tax it has collected
20 September 2019
HMRC recently produced a document to support its Annual Report setting out the amount and type of tax each of its Com collected from compliance activities in 2018/19.
The headlines are arguably impressive, with £34bn of additional tax coming from interventions of all different types.
The detail makes very interesting reading and one wonders if there is a reason why the detail wasn’t included within the Annual Report – it is only 2 pages.
The detail is of particular interest. The Large Business Directorate collected £2bn of corporation tax and £6bn of VAT, which is nothing too surprising, but only £61m of income tax – assumed to be PAYE and no specific reference to NIC. Perhaps that is included within Other Interventions of £679m. Given PAYE and NIC are a far greater source of income than corporation tax for the Exchequer, this seems odd.
By contrast, the Wealthy & Mid-Sized Business Compliance Directorate looks to be more as expected. It collected £343m of corporation tax, but £1.85bn of income tax and £2.6bn of VAT. There is a similar story for the Individuals and Small Business Compliance Directorate but other interventions producing £1bn – which is assumed to be at least in part inheritance tax.
As expected, the Counter Avoidance Directorate weighed in with £1.5bn of income tax but oddly only £273m of accelerated payments. It may be that these were counted in previous years!
It may be assumed that the reported £1bn derived from the threat of the controversial loan charge is included within the income tax figure. Next year should make satisfactory reading for the Exchequer as it expects the loan charge will produce £2.2bn by 31 January 2020.
The Fraud Investigation Service Directorate, a team we work with on a daily basis, makes interesting reading as well. Apparently it collected almost £3bn of excise duty yet in all of our recent dealings, no client has paid any excise duty.
The document then goes onto to discuss the Large Business Directorate compliance activity. It sets out the amount of tax in its collection pipeline – a total of almost £30bn - over 3 times what it achieved in the previous year. The biggest number by far is Transfer Pricing and thin capitalisation at £5.9bn. Avoidance is £1.3bn, and excise is nowhere to be seen! Excise barely featured in the 2018/19 figures. There are caveats that the numbers are estimates of the maximum potential additional tax and it is not actual unpaid tax or tax owed. We question why HMRC has published these figures as it could be suggested that it is setting the Large Business Directorate up for a fall!