Can HMRC staff cope with new amnesty?

HM Revenue & Customs may be preparing a second round of investigations
looking at money deposited in overseas bank accounts, but there is growing
concern about whether it actually has enough staff to manage a further influx of
information on funds in offshore jurisdictions.

Last year HMRC staged an amnesty allowing account holders to come clean about
the funds they hold in offshore jurisdictions, a project which netted the public
coffers a substantial £400m in so far unpaid tax. But the taxman is reportedly
still sifting through the deluge of information that it generated.

So has it got the people in place to effectively handle a second?

The taxman reportedly cut 3,400 jobs in December last year and has closed 90
tax offices around the country. Claims that the taxman is over-stretched will be
fuelled by its plans to cut 12,500 jobs as part of an efficiency program.

Terry Cook, president of HMRC staff union the Association of Revenue and
Customs, is on record as saying he believes there is no ‘dead wood’ left in the
taxman’s offices.

He claims HMRC is struggling to cope in many areas because of resource
restraints, adding that UK tax payers holding bank accounts’ offshore is a
significant issue for HMRC, and the department has to manage the issue within
spending constraints.

‘It doesn’t help that we’re under such resource pressure – but it’s an
example of so many instances of having to cut costs. The government should be
investing in this and getting the return from it,’ he says.

Andrew Watt, managing director of tax disputes and investigations at Alvarez
and Marsal Taxand, says if HMRC hired additional fraud investigators the cost
would be offset by extra revenues generated from an amnesty.

‘On the face of it is cost effective to hire fraud investigators as the yield
is quite substantial and you’d think it would pay for itself. Fraud is still
being committed and it’s not going away so HMRC need to put
themselves in a position to counteract it,’ he says.