HMRC campaigns ― introduction

By Tolley in association with Guy Smith of inTAX Ltd

The following Personal Tax guidance note by Tolley in association with Guy Smith of inTAX Ltd provides comprehensive and up to date tax information covering:

  • HMRC campaigns ― introduction
  • What are HMRC campaigns?
  • Why does HMRC launch campaigns?
  • How does HMRC approach campaigns?
  • What are the results of campaign activity so far?
  • Campaigns begun before SR10
  • Campaigns started since SR10
  • Future campaigns
  • How are campaigns chosen by HMRC?

What are HMRC campaigns?

Campaigns are targeted disclosure opportunities for selected groups of individuals, traders and professionals to make declarations of any undeclared income and over-claimed expenses.

Sometimes referred to in the media as ‘amnesties’, campaigns are not an opportunity to avoid, evade or pay less tax as the term amnesty suggests. They are an opportunity to achieve a lower penalty on any additional tax resulting from a disclosure.

HMRC charges financial penalties on disclosures giving rise to additional tax.

During an enquiry or other compliance check, the penalty chargeable is based on the behaviour of the entity involved (the individual or business), the type of tax involved and whether it relates to an offshore matter, the quality of the disclosure and whether the disclosure is completely unprompted or prompted by HMRC action. The maximum penalty chargeable under these conditions can be up to 200% of the additional tax, eg if £10,000 is owed in tax, HMRC can charge a £20,000 penalty.

During campaigns however, HMRC encourages disclosures by offering beneficial penalty terms. The terms can vary between different campaigns, but are typically much lower than would be charged under more common HMRC activity.

Why does HMRC launch campaigns?

The core objective is to collect more tax in a cost effective manner.

When the Coalition Government came into power in the summer of 2010, the Treasury immediately started looking for cost efficiencies across the board in an effort to reduce the annual spending deficit.

When the outcome of the Spending Review (SR10) was announced, HMRC was told to reduce its costs by 25% and deliver extra revenue each tax year from increased compliance activity.

Before SR10, HMRC brought in revenue from various compliance activities anyway, with £12.6bn delivered from tackling non-compliance in 2009/10. A yield of £13bn per year from compliance activities