Investigations into payroll irregularities by the UK’s largest businesses brought in £533m in extra tax, compared to £205m the previous year, according to research from law firm Pinsent Masons.
The significant increase is attributed to HMRC’s crackdown on employee benefit trusts (EBTs) beginning to pay off.
Pinsent Masons says that the EBT targeting and the more recent attack on EFURBS - Employer Funded Unapproved Retirement Benefits Schemes - has begun to bear fruit with HMRC beginning to persuade large businesses to end arrangements and pay tax and NIC following a number of successful court cases and the introduction of much stricter tax laws in 2010.
Ray McCann, partner at Pinsent Masons, said the strategy has “finally started to pay off after a slow start.”
“Although HMRC has already delivered a dramatic increase in yield from these investigations we don’t anticipate that the Revenue will be using this as an excuse to rest on its laurels. We expect even more activity by HMRC in the coming year as they look to close other loopholes with the aim of bringing in even more revenue in 2014," he said.
“For companies with EBT schemes that have been called into question, time is running out. If they do not settle with HMRC they will face direct action and, if HMRC gets its way, far more severe penalties.
“Almost doubling the amount of money that they take from this kind of tax investigation is further proof that HMRC is now very deliberately targeting the biggest companies,” added McCann.
The government decided 15 years ago that the tax advantages of EBTs were being abused. They are popular with hedge funds and banks to manage tax payments on bonuses.