Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling. If the taxpayer wins their case, the money is reimbursed with interest.
It was expected some £210m would be gleaned through the move by March 2015, but HMRC actually received £596m – refunding £28m after legal challenges, gaining it a net £568m.
HMRC said it expects to issue 64,000 accelerated payment notices to individuals and businesses currently involved in tax avoidance schemes.
For the first time, HMRC also issued 379 ‘follower notices’ to tax avoidance users. Follower notices urge tax avoiders to pay the disputed tax they owe after court rulings in similar cases that find in the taxman’s favour. It issued follower notices with a collective value of more than £170m in 2014/15.
Elsewhere in the report, it was revealed 89.7% of complaints made to the adjudicator about HMRC were upheld in part or in full in 2013/14.
In all, 2,311 cases were reported on in 2013/14, with 1,229 cases – 53.2% – upheld in full, while 844 – 36.5% – partially upheld. HMRC has been under increasing pressure following cuts and criticism over its handling of phone calls and letters. In June, it was announced £45m would be allocated to improving its ‘customer’ service, as it released statistics which showed an inconsistent call handling performance in 2014/15.
Its performance has been a regular source of problems and criticism in recent years, particularly in the context of its contact centre closures.
The latest report shows £210m in cost efficiencies last year, through continuing to reduce estates, workforce, IT and procurement costs. It brings total sustainable cost savings over the past four years to £991m – exceeding the target by £25m.
The annual report also reveals HMRC’s tax take rose nearly £12bn to £517.7bn, which it attributed to economic growth and the continued crackdown on tax evasion and avoidance.
Of the £517.7bn, some £163.1bn (32%) was sourced through income tax, followed by £113.9bn (22%) via VAT. Around £108bn (21%) came through National Insurance contributions, while just £41.4bn (8%) was generated by corporation tax. Approximately £27.2bn (5%) came from levies on hydrocarbon oils, with £64bn (12%) came through other taxes.