With more compliance officers, greater use of data, tougher consequences for non-payment, and new debt collection powers, the direction of travel from the Budget is clear: HMRC are being given more resources to tackle the tax gap. So, what should taxpayers expect?
More compliance officers, but not overnight: The Government had already committed to recruiting 5,500 additional HMRC compliance officers. The Budget goes further, increasing that figure to 6,170. However, recruitment does not translate immediately into experienced compliance officers. HMRC’s previously published accounts indicate that much of the increase in their compliance workforce is expected to come through their entry-level trainee programme, with new recruits becoming fully productive after four years, following an initial nine months of training. That creates an important short-term challenge for HMRC: how do they increase compliance activity while thousands of their new officers are still developing their expertise?
One answer is likely to be greater use of data-led, resource-efficient intervention.
Expect more ‘nudge letters’: That makes HMRC’s continued use of One to Many campaigns particularly important.
These campaigns allow HMRC to contact large groups of taxpayers where their data indicates there may be a tax risk. The letters, commonly known as ‘nudge letters’, put the onus on taxpayers to review their own affairs, identify inaccuracies and disclose any underdeclared liabilities.
For HMRC, this provides a cost-efficient way of pursuing potentially under-reported tax without opening an individual compliance check in every case. For taxpayers receiving a nudge letter, the message should therefore not be mistaken for routine correspondence: HMRC’s data has prompted the contact; therefore the response needs careful consideration.
Shifting the onus to taxpayers: That theme of putting greater responsibility on taxpayers also runs through HMRC’s Modernising the Correction of Errors proposals.
The initiative is intended to encourage taxpayers to correct known errors sooner, while giving HMRC greater powers where they fail to do so. The Budget confirmed that the legislation will be introduced from 1 April 2028.
The practical point is an important one. Taxpayers who are already aware of historic errors should consider addressing them sooner rather than later. Correcting an error before the new regime takes effect could significantly affect the resulting tax, interest and penalty position.
Wealthy taxpayers and offshore affairs remain firmly in focus: HMRC regard an individual as falling within their wealthy taxpayer population where they have income above £200,000, or assets above £2m, in any of the previous three years. Their most recent tax gap figures estimate that £3.6bn arises from wealthy individuals’ personal taxes.
The Budget announced a new multi-year plan to modernise HMRC’s approach to compliance among wealthy taxpayers. The plan focuses on greater use of data, technology and specialist expertise, with offshore non-compliance a particular area of attention.
HMRC aim to recruit 400 specialists by 2030 to tackle non-compliance involving overseas income and gains, with 244 people already recruited into these roles. Combined with HMRC receiving financial information from more than 100 jurisdictions each year, taxpayers with overseas interests should expect increasingly targeted compliance activity.
HMRC are also strengthening debt collection: Compliance activity is only part of the picture. The Budget also announced a further £70m over five years for HMRC’s existing partnerships with private-sector debt collection agencies.
HMRC will also receive a new power allowing them to recover lower-value tax debts through regular instalments directly from the bank accounts of individuals and companies that can afford to pay, but repeatedly fail to do so.
A tougher approach to ‘naming and shaming’: HMRC’s ‘naming and shaming’ regime has existed since 2009. It currently enables HMRC to publish details of taxpayers where a deliberate penalty has been charged, the underlying tax exceeds the applicable threshold, and the taxpayer has not obtained the maximum available penalty reduction through cooperation and disclosure.
A recent policy paper announced an increase in the tax threshold from £25,000 to £50,000 from November 2026. The Budget has now announced plans to strengthen the wider framework further, with changes expected next year.
What should taxpayers take from the Budget? Taken together, these announcements point to a more data-led and increasingly targeted HMRC. Recruiting thousands of officers will take time, but HMRC do not need to wait for those recruits to become fully productive before increasing compliance activity.
Greater use of data and nudge letters, specialist teams targeting wealthy and offshore taxpayers, stronger incentives to correct errors and enhanced debt collection powers all point in the same direction.
For taxpayers, the best defence is increasingly a proactive one: identify problems before HMRC do, understand what information HMRC are likely to hold, and address historic errors before they escalate into a compliance check, larger penalties or more serious consequences.
Andy Walker & Olivia Wiggett, RSM UK
With more compliance officers, greater use of data, tougher consequences for non-payment, and new debt collection powers, the direction of travel from the Budget is clear: HMRC are being given more resources to tackle the tax gap. So, what should taxpayers expect?
More compliance officers, but not overnight: The Government had already committed to recruiting 5,500 additional HMRC compliance officers. The Budget goes further, increasing that figure to 6,170. However, recruitment does not translate immediately into experienced compliance officers. HMRC’s previously published accounts indicate that much of the increase in their compliance workforce is expected to come through their entry-level trainee programme, with new recruits becoming fully productive after four years, following an initial nine months of training. That creates an important short-term challenge for HMRC: how do they increase compliance activity while thousands of their new officers are still developing their expertise?
One answer is likely to be greater use of data-led, resource-efficient intervention.
Expect more ‘nudge letters’: That makes HMRC’s continued use of One to Many campaigns particularly important.
These campaigns allow HMRC to contact large groups of taxpayers where their data indicates there may be a tax risk. The letters, commonly known as ‘nudge letters’, put the onus on taxpayers to review their own affairs, identify inaccuracies and disclose any underdeclared liabilities.
For HMRC, this provides a cost-efficient way of pursuing potentially under-reported tax without opening an individual compliance check in every case. For taxpayers receiving a nudge letter, the message should therefore not be mistaken for routine correspondence: HMRC’s data has prompted the contact; therefore the response needs careful consideration.
Shifting the onus to taxpayers: That theme of putting greater responsibility on taxpayers also runs through HMRC’s Modernising the Correction of Errors proposals.
The initiative is intended to encourage taxpayers to correct known errors sooner, while giving HMRC greater powers where they fail to do so. The Budget confirmed that the legislation will be introduced from 1 April 2028.
The practical point is an important one. Taxpayers who are already aware of historic errors should consider addressing them sooner rather than later. Correcting an error before the new regime takes effect could significantly affect the resulting tax, interest and penalty position.
Wealthy taxpayers and offshore affairs remain firmly in focus: HMRC regard an individual as falling within their wealthy taxpayer population where they have income above £200,000, or assets above £2m, in any of the previous three years. Their most recent tax gap figures estimate that £3.6bn arises from wealthy individuals’ personal taxes.
The Budget announced a new multi-year plan to modernise HMRC’s approach to compliance among wealthy taxpayers. The plan focuses on greater use of data, technology and specialist expertise, with offshore non-compliance a particular area of attention.
HMRC aim to recruit 400 specialists by 2030 to tackle non-compliance involving overseas income and gains, with 244 people already recruited into these roles. Combined with HMRC receiving financial information from more than 100 jurisdictions each year, taxpayers with overseas interests should expect increasingly targeted compliance activity.
HMRC are also strengthening debt collection: Compliance activity is only part of the picture. The Budget also announced a further £70m over five years for HMRC’s existing partnerships with private-sector debt collection agencies.
HMRC will also receive a new power allowing them to recover lower-value tax debts through regular instalments directly from the bank accounts of individuals and companies that can afford to pay, but repeatedly fail to do so.
A tougher approach to ‘naming and shaming’: HMRC’s ‘naming and shaming’ regime has existed since 2009. It currently enables HMRC to publish details of taxpayers where a deliberate penalty has been charged, the underlying tax exceeds the applicable threshold, and the taxpayer has not obtained the maximum available penalty reduction through cooperation and disclosure.
A recent policy paper announced an increase in the tax threshold from £25,000 to £50,000 from November 2026. The Budget has now announced plans to strengthen the wider framework further, with changes expected next year.
What should taxpayers take from the Budget? Taken together, these announcements point to a more data-led and increasingly targeted HMRC. Recruiting thousands of officers will take time, but HMRC do not need to wait for those recruits to become fully productive before increasing compliance activity.
Greater use of data and nudge letters, specialist teams targeting wealthy and offshore taxpayers, stronger incentives to correct errors and enhanced debt collection powers all point in the same direction.
For taxpayers, the best defence is increasingly a proactive one: identify problems before HMRC do, understand what information HMRC are likely to hold, and address historic errors before they escalate into a compliance check, larger penalties or more serious consequences.
Andy Walker & Olivia Wiggett, RSM UK
