Are you prepared for an investigation by HMRC after Budget Day?
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Rachel Reeves is set to deliver Labour’s first Budget in almost 15 years on 30 October 2024. Speculation in the run-up to Budget Day regarding what tax measures might be announced is nothing new, but this time it feels different.
Many tax commentators expect this year’s Budget to be a once in a generation event and speculation is rife about tax increases that could be introduced overnight.
As a result, it is not surprising that many individuals and businesses are seeking to conclude transactions prior to Budget Day – hoping to take advantage of the current tax regime and to use existing tax rates, allowances and reliefs.
But pre-Budget planning is fraught with risk, particularly any transactions lacking genuine commercial purpose and those undertaken other than on an arm’s length basis.
We believe there is likely to be a surge in HMRC investigations in the months and years ahead given the pressure on public finances, the large volume of transactions being rushed through in advance of the Budget, and the resources devoted by the government to this area. With the lack of available time, taxpayers may not have taken sufficient professional advice in advance of transactions or considered the practicalities of their tax planning. We would not be surprised if transactions undertaken in the weeks leading up to Budget Day face increased scrutiny from HMRC.
The new government has already announced it will invest in HMRC’s compliance work, hiring around 5,000 additional staff to increase the number of investigations, tackle fraud and ensure that tax owed is collected. HMRC has started the process of recruiting additional staff and we expect further announcements on Budget Day regarding tackling the “tax gap” (the difference between amounts owed and the amounts collected).
With more HMRC officers being trained to look at the tax affairs of individuals and businesses, and given HMRC’s extensive information powers and the pressure to close the tax gap and maximise revenues, it is more important than ever that taxpayers are supported through HMRC enquiries.
Our team are experienced in dealing with HMRC compliance checks, investigations and enquiries, tax disputes and voluntary disclosures. To speak with our specialist tax dispute resolution team in confidence, please email our dedicated mailbox at taxdisputes@pkf-l.com.