HMRC Disciplinary Cases

HMRC dismissed 40 members of staff and gave 95 a written warning for breaches in data security in the last twelve months.

A recent Freedom of Information request found that HMRC disciplined more staff for failing to protect taxpayer data last year than at any point in the past five years.

Over these 5 years:

  • 216 staff were dismissed for data security and 380 received a written warning.
  • 300 staff lost their jobs and nearly 1000 received written warnings for breaches of individual contracts, such as attendance.
  • 74 staff members were sacked for issues outside work that could affect employment relationship.
  • 30 people were dismissed for misconduct concerning salary issues and expenses claims, whilst around 40 were given written warnings.
  • 68 staff were dismissed, and 89 were given written warnings for issues with the individual’s personal tax affairs and benefits claims,

To put this in context, HMRC currently employs 62,000 people across the country.

Post-pandemic employee exodus

Recent research shows:

  • 38% of employees planning to leave their current job within the next 12 months,
  • this figure rises to 55% for 18-34-year-olds. 

The reasons for staff leaving:

  • 29% say lack of career progression opportunities,
  • 25% say poor management,
  • 29% say lack of appreciation for work,
  • 22% say poor work-life balance, and
  • 18% say toxic workplace culture.

Restaurateurs’ half a million-pound tax bill

Three brothers have been banned from acting as company directors for seven years, seven years, and three-and-a-half years respectively for deliberately avoiding paying full VAT and corporation tax on their restaurants.

In an investigation by the Insolvency Service, the brothers all systematically under-reported their earnings, by deliberately destroying and removing sales records in their company accounts avoiding £566,749 in tax. When they tried to put the company into Creditor Voluntary Liquidation in August 2018, an investigation was instigated.

Throughout the Insolvency Service investigation, the brothers sought to discredit and place blame on the company’s accountant, despite receiving written warnings from the accountant over a few years that the company had inadequate record-keeping processes in place and that it was obvious that cash and sales records were going missing.

In some cases, sales identified solely through card payment data was found to be more than their total reported sales, which also included cash payments.

The bans issued by the insolvency service reflect the length of time each of the brothers were acting as directors.

Thousands of savers caught in pensions tax trap

The amount of tax charged for people breaching the pensions lifetime allowance (LTA) and annual allowance (AA) limits rose to £283m for the tax year 2018/19.

34,220 taxpayers reported pension contributions exceeding their annual allowance through self-assessment in their 2019 returns.

About 80% of savers choose to pay a 25% lifetime allowance charge, preferring to leave the money in the pension scheme, rather than withdraw it as a lump sum which would have incurred a 55% charge.

Pensions exceeding the lifetime allowance of annual allowance are why senior clinicians in the NHS have chosen to stop work or retire due to the huge tax bills they are facing each year for breaching the limits.

The same applies to judges, the armed forces and other public sector workers who are facing enormous tax charges simply for saving for their retirement.

In the March Budget this year, Chancellor Rishi Sunak announced that he would freeze the lifetime allowance at £1,073,100 until at least 5 April 2026. The HM Treasury predicts that this will raise an additional £1bn in tax by 2026.

There are rumours currently circulating that the lifetime allowance threshold will drop further which would mean that more pension savers will be caught by the tax charge.

HMRC – Covid scheme fraud 

There have been over 12,000 investigations launched into the misuse of the furlough, SEISS and Eat Out To Help Out schemes over the period up to the end of March 2021. The investigations are triggered when HMRC suspects error and fraud within claims under each of the schemes. 

The coronavirus job retention scheme (CJRS) was the biggest target for fraud, with HMRC undertaking 7,384 enquires. These investigations have so far led to five arrests. HMRC also opened 5,020 investigations into SEISS claims in the same period but there have been no arrests as of 28 March. The Eat Out to Help Out scheme had the fewest with 424 investigations and three arrests.

When taking the various other recovery schemes aimed at businesses into account, such as the Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS), it is anticipated that losses to the exchequer will be counted in billions. HMRC activity in this area is likely to continue for a few years.

Businesses suspected of incorrect CJRS claims will receive a 20-page HMRC compliance letter giving the employer two weeks to provide information such as RTI returns and the claim data. On being contacted HMRC generally give a extension to the timetable.

HMRC is conducting many of these compliance checks over Microsoft Teams rather than face to face, causing confusion for some claimants who are not familiar with the technology.

HMRC made its first furlough arrest in July 2020 and has since made numerous other arrests, including an accountant and a director for a suspected £70,000 case of fraud. 

The government has this year earmarked a £100m investment into a specialist coronavirus fraud taskforce.


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