The Chancellor expects HMRC to go further in tackling avoidance and evasion, bolstering its budget to enable it to increase specialist resources in tackling complicated issues, such as transfer pricing.
In the Treasury's Autumn Statement, the government has set out plans revealing intentions to strengthen HMRC's risking capability for large business, by increasing its transfer pricing specialist resources so as to accelerate the identification, challenge and resolution of transfer pricing issues and to further strengthening risk assessment capability across the large business sector.
Transfer pricing is a practice which multinationals have recently come under fire for, since it allows them to restructure and shift profits into lower-tax jurisdictions, escaping higher penalties in countries from which their profits are effectively derived.
In an effort to gather more into Treasury coffers, HMRC is to receive £155m, made up of additional funding and reinvestment, to fund the range of measures announced at this Autumn Statement to increase compliance and revenue to the Exchequer, expand the online delivery of services to customers and tackle tax credit error, fraud and debt.
In addition, HMRC will also expand its Affluent Unit to deal more effectively with taxpayers with a net worth of more than £1m; increasing specialist resources to tackle offshore evasion and avoidance of inheritance tax; and improving its risking technology, including increased use of third party data.
Taken together, these measures will enable HMRC's target for additional revenues to be increased to £22bn in 2014/15, £2bn higher than in 2010/11 and reduce losses from tax credits by more than £1bn over the next four years.
HMRC will also be setting up a new centre of excellence, staffed by experts on tax fraud and evasion aimed at building HMRC's offshore capability, making better use of HMRC data to identify tax evaders, reviewing HMRC's legal powers in this area and developing a more proactive approach to international engagement to tackle evasion.
HMRC will publish a comprehensive evasion strategy in spring 2013.
In addition to plans for the introduction of the UK's first ever General Anti-Abuse (GAAR) rule, the Treasury also announced it will consult on the introduction of significant new information disclosure and penalty powers to target the promoters of aggressive tax avoidance schemes.
John Cassidy, tax investigations and disputes resolution partner at PKF, said: 'Throwing more resources at the problem is fine in theory, but it's absolutely essential that these additional inspectors are utilised effectively.
'Case selection, in particular, is going to be crucial. To make the most of this extra investment, it is imperative that HMRC chooses the right cases to pursue and has the foresight to drop investigations that aren't going anywhere.'
