Investigations into tax evasion and avoidance have yielded £34bn in extra tax revenue over the past year, according to HMRC’s annual report.
Although the total this year was higher than the £30.8bn gained last year, it was still lower than the £36bn targeted by HMRC.
Tax evasion, which is illegal, is when someone conceals information from HMRC about their income to pay less tax. Tax avoidance, on the other hand, means exploiting the system to find ways to reduce how much you owe.
The last time HMRC recovered more than £36bn was in 2019-20, when £36.9bn was recovered by investigators.
HMRC’s fraud investigations service, who look into the most serious tax fraud, were responsible for recovering £4bn. Their work led to 218 convictions over the past year in a report released last week.
Analysis by law firm Pinsent Masons revealed £2.7bn of the extra £34bn came from wealthy people underpaying on income tax.
Steven Porter, head of tax disputes and investigations at Pinsent Masons, described the total as “remarkable”.
“HMRC’s role in bringing in extra tax through investigations is incredibly valuable, especially now that the cost of government borrowing has increased so considerably,” he said.
A series of expensive government measures, such as the support offered to families on their energy bills, has put pressure on the government’s finances.
Earlier this year it was revealed the government’s debt to GDP ratio – a measure of the strength of a country’s public balance sheet – climbed above 100 per cent for the first time since March 1961.
In this context, Porter noted “HMRC is going to be casting its net very widely over the next year”.
Data released last year showed that HMRC is now tracking 512 firms suspected of using tax havens, an 84 per cent increase on last year.