The government’s pledge to invest £300 million in HMRC over the next five years to close the UK’s tax gap has been branded “wholly insufficient” by a leading tax expert, who warned that without a long-term strategy and systemic reform, the country’s complex tax system will continue to hinder progress.
Nimesh Shah, CEO of audit, tax and business advisory firm Blick Rothenberg, said the investment — which forms part of the Chancellor’s spring statement — “won’t scratch the surface” of tackling the UK’s widening tax gap, which now stands at a record £40 billion.
“The government’s claims of a three-fold return on this investment in additional tax revenue seem incredibly ambitious,” Shah said, “especially given that HMRC has faced repeated criticism from both the government itself and the Public Accounts Committee.”
He noted that despite successive waves of funding over the past decade — including £1.4 billion in the past three years alone — the tax gap has remained stubbornly around 5 per cent of total revenues, even as overall tax receipts have grown. “The result is that the absolute value of the tax gap has never been higher,” he said.
Shah argued that Britain’s tax burden, now at its highest level in 50 years, is being undermined by HMRC’s continued inefficiencies and a lack of focus on effective collection. “It’s fine for the government to increase taxes as it sees fit, but without accountability and operational reform at HMRC, the gap will continue to grow,” he warned.
As part of the Chancellor’s plans, the government announced 500 new HMRC compliance officers and 600 additional staff in debt management, along with promises to modernise tax systems through digitisation and partnerships with businesses. But Shah remains sceptical: “These plans sound sensible on paper, but HMRC’s customer service is at an all-time low. Phone lines are closing, taxpayers can’t access the right information, and there’s a long way to go before we can have confidence in these projected returns.”
He believes the root of the issue lies in the complexity of the UK’s tax code — the longest in the world — and argues that HMRC is simply unable to keep pace with the volume of new legislation introduced each year.
“The government needs a proper strategy on tax and the future direction of HMRC,” Shah said. “Piecemeal investments and bold claims of revenue returns do not inspire confidence. A future Chancellor focused on true reform would take a step back and develop a long-term, sustainable strategy — because history shows that throwing more money at HMRC alone won’t address the problem.”
Read more:
Throwing more money at HMRC won’t fix Britain’s £40bn tax gap, warns leading tax expert