HM Treasury News Release 26 November 1996
160/96 HMT 3
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FURTHER ACTION TO CRACK DOWN ON FRAUD AND ABUSE: "SPEND TO
SAVE"
The Chancellor is determined that money spent on social
security goes where it is intended to go and that tax which is
due is paid. Fraud and abuse are unfair and unacceptable. So
too is avoidance which makes large inroads into tax yields.
New measures have been announced by the Chancellor to crack
down hard on fraud and evasion which will secure the tax base,
counter benefit abuse and protect the ordinary taxpayer.
800 million Pounds will be spent by a number of
departments over the next three years to save an estimated 6.7
billion Pounds. The annual cost of the measures will rise
from 200 million Pounds in 1997-98 to a little over 300
million Pounds in 1999-2000, with estimated savings rising
from 900 million Pounds next year to 3.3 billion Pounds by the
third year.
Action will be concentrated on areas where there is a
relatively high risk of abuse or non-compliance, including
incorrect application of tax law. It will build on what is
already being done by the Inland Revenue and Customs and
Excise, with the existing priority which these departments
give to action to improve compliance being stepped up a gear.
The Department of Social Security is also stepping up its
activities against benefit fraud. The measures include:
- the Inland Revenue will be able to undertake
additional corporate tax enquiries and
investigations into international transactions,
speed up the settlement of outstanding tax
liabilities, take further action to counter the
shadow economy, and redeploy 1,000 staff onto
collection and enquiry work after the introduction
of self-assessment is complete;
- Customs and Excise will improve VAT compliance
amongst higher risk traders by the retention of
1,100 staff, take extra steps to tackle evasion,
reinforce the new teams tackling the shadow economy
and crack down on the new breed of criminal gangs
who are evading the tax they should pay;
- the Department of Social Security will build on the
substantial anti-fraud programme introduced over the
last two years, drawing on experience of where
action can be most effectively directed. The
additional action will include increasing the number
of visits to high risk groups of claimants from
650,000 this year to nearly 2 million next year.
Other measures to be introduced include a nationwide
extension of the successful pilot wheelclamping scheme, to
tackle vehicle excise duty evasion, and improved controls to
combat legal aid fraud and abuse.
Notes for Editors
1. All departments have programmes in place to combat fraud,
as a normal activity. A key aspect of the work of the Revenue
departments is tackling tax evasion. Nonetheless, the
Government keeps under continual review whether more can and
should be done. In 1994 and 1995, specific programmes were
established to combat social security fraud. These earlier
programmes will cost 680 million Pounds over the next three
years and are expected to save nearly 4.7 billion Pounds in
the period.
2. Details of the further measures included this year in
departments' plans are summarised in the attached table,
together with the costs and expected savings over the next
three years. The estimates of additional tax revenues are
based on the two Revenue Departments' past experience of
yields achieved from compliance work. The estimates of
benefit savings take no account of deterrent and preventative
effects, which could be significant. Further information is
in press notices issued by Inland Revenue, Customs and Excise,
the Department of Social Security, the Department of Transport
and the Home Office.
3. If you have access to the Internet you can find this
information at "http://www.hm-treasury.gov.uk". Other
Treasury material can also be found at this address.
Department Main measures Cost Saving
#m #m
Revenue Corporate technical review and avoidance, income
tax compliance, action on shadow economy 187 1,950
Customs VAT compliance and avoidance, action on shadow
economy, excise fraud and evasion, Single Market
excise smuggling 88 2,250
DSS Key components: increased pre-award checks, new
claims visits and targeted reviews of high risk
groups, and additional fraud investigation 469 2,145(1)
FCO Action to improve entry clearance and reduce
bogus asylum applications 5 54(2)
Home Office Additional Airline Liaison Officers (working with
local airline staff to prevent passengers to the
UK using fraudulent or inadequate documents) and
quicker processing of asylum applications 12 61(2)
DVLA VED evasion: nationwide extension of pilot
wheelclamping scheme 15 47
Legal Aid Board Improved controls to combat legal aid fraud and
abuse 6 116
Northern Ireland Social security measures similar to DSS 14 63(1)
(1) includes NICs. (2) to DSS
# = Pounds Sterling