HM Revenue & Customs has collected £39.5bn from tax investigation work during the past five years, the accountancy firm UHY Hacker Young has revealed.

The accountancy and recovery specialist said HMRC has employed tougher measures on tax avoidance since April 2005, when HM Customs & Excise and the Inland Revenue merged.

Hacker Young added that in the first 12 months of its existence, during the course of 2005 and 2006, HMRC generated £7.4bn through its tax enquiries and other compliance work, but this jumped 64 per cent to £12.1bn in the most recent year, to March 31 2009.

Hacker Young added that since coming into existence, HMRC has sought tougher and more intrusive powers, such as the power to make arrests, enter business premises unannounced and to demand confidential information on taxpayers from third parties.

The firm claimed that the steep rise in extra tax acquired through compliance investigations is also partly a reflection of the increasing number of mistakes being made by taxpayers as the tax system grows ever more complicated.

Roy Maugham, tax partner at UHY Hacker Young, said: “The amount of money that HMRC is taking in through compliance work is huge but this hasnt come without significant costs to innocent taxpayers.

“Since HMRCs formation the Inland Revenue side of the department has been lobbying to gain the draconian powers that Customs has to deal with the threat of drug smugglers and arms dealers.”

Maugham believes the result is that HMRC now has sweeping powers to enter business premises to conduct a search without warning beforehand and to make arrests without the need to be accompanied by a police officer.

He added: “HMRC is also using increasingly controversial methods to tackle tax evasion. Purchasing offshore bank account details that have been stolen by criminals, for example, now seems a perfectly legitimate tactic to HMRC.

“With the current state of the public finances, HMRCs aggressive stance on tax investigation work is likely to become ever tougher.”

Reproduced with kind permission of Credit Today  http://www.credittoday.co.uk