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A fresh crackdown on tax evasion and avoidance is expected to net the Treasury an additional £1bn over the next four years, under measures set out in today’s Spring Statement.
In the only revenue-raising measure of the statement, chancellor Rachel Reeves unveiled a package of initiatives which build on measures to tackle tax non-compliance, set out in last year’s Autumn Budget.
The Spring Statement measures include an increase in the rates at which late payment penalties are charged from 2 per cent to 3 per cent for taxpayers in the government’s Making Tax Digital (MTD) programme, who are subject to a separate penalty regime than other taxpayers.
The changes will affect VAT taxpayers from next month and will also impact self-employed people and landlords with at least £50,000 annual earnings — when they join the programme from April 2026.
The new rates will be 3 per cent of the tax outstanding where it is overdue by 15 days, plus another 3 per cent when it is overdue by 30 days, plus 10 per cent per annum where tax is overdue by 31 days or more.
The Institute of Chartered Accountants in England and Wales described the increase as “very significant” and warned that timely payments would be “more critical than ever for taxpayers and businesses”.
Wednesday’s announcements included placing more tax debts with private debt collection agencies and recruiting 1,100 more debt and compliance staff at the tax authority. These additional officers will add to the 5,000 new compliance staff announced in the autumn.
Reeves said new measures to boost tax collection would raise a further £1bn in tax revenue by 2029-30 — bringing the total additional tax raised from improved compliance to £7.5bn in 2029-30. Overall, the changes she announced on Wednesday will result in additional tax by that period of £2.2bn.
Supporting documents for the Spring Statement, released on Wednesday, revealed more details about how the government plans to increase tax collection through clamping down on evasion and avoidance.
These included a separate consultation on reforming penalties, affecting all other taxpayer groups, apart from MTD payers, levied when taxpayers declare incorrect information to HMRC; strengthening the tax authority’s powers to clamp down on the developers of avoidance schemes, including lawyers and tax advisers; and making better use of data sharing between HMRC and external bodies about taxpayers’ affairs.
On penalties, the consultation will seek feedback on either improving the existing system of fines when taxpayers fail properly to declare the right information to HMRC, or developing a new regime.
The government said it is minded to introduce “higher inaccuracy and failure to notify penalties” for those who intentionally conceal or under-report to HMRC.
It proposed a model made up of two types of penalty: “a misdeclaration/failure to notify penalty” and a “civil evasion penalty”, stating that most penalties would fall in the former category.
The civil evasion penalty would apply a “tougher sanction . . . reserved for the more serious cases of deliberate non-compliance”.
A separate consultation, also published on Wednesday, sought feedback on how the government can better crack down on those who facilitate tax avoidance and evasion. This sought comment on ways to enhance HMRC’s powers to ensure “effective deterrents and responses to tax advisers who harm the tax system and who facilitate non-compliance of their clients”.
In recent years, there have been several tax advice scandals in which rogue advisers have pushed non-compliant advice and schemes. These range from tax avoidance outfits preying on NHS workers, to companies pushing fraudulent research and development claims and the use of discredited loan schemes.
The consultation asks for input on various enforcement measures to tackle rogue advisers including stronger penalties, publishing details of tax advisers subject to HMRC sanctions, and HMRC sharing information about non-compliant advisers with their professional bodies. It also proposes new options to tackle legal professionals behind avoidance schemes.
Other consultations released on Wednesday confirmed previously announced proposals. April 2028 was confirmed as the date that self-employed people and landlords with earnings of at least £20,000 will be required to comply with the MTD programme. The government also released a planned consultation on introducing a new system of advance clearances for R&D claims, to help prevent error and fraud and improve the claims experience.
