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HM Revenue & Customs has stepped up its efforts to track down unpaid capital gains tax, with the number of completed investigations more than trebling in the last tax year, according to new data.
The UK tax agency concluded 14,223 probes into the levy which is paid on profits from asset sales in 2023-24, up from 4,564 cases in 2022-23, figures obtained under the Freedom of Information Act show.
The data comes as HMRC finds itself under growing pressure from the government to increase tax revenue by improving compliance, with wealthy people a key target group and property under particular scrutiny, according to tax experts.
Last month, an influential group of MPs warned that the agency was significantly underestimating how much tax it loses to evasion each year and lacked a clear strategy to stop “bad actors”.
Despite the rise in the number of completed investigations between 2022-23 and 2023-24, the amount of money they brought in only rose to £202.4mn, from £180.8mn.
In the 2022-23 year, the latest for which data is available, CGT liabilities totalled £14.4bn — about 2 per cent of overall tax receipts.
Brian Carey, tax partner at accountancy firm UHY Hacker Young, which submitted the FOI request, said: “UK plc has run out of money and HMRC is clearly looking to breach any gap in the country’s finances.
“CGT is an easier target for several reasons,” he added, citing the reduction in the annual tax-free allowance in 2023-24 from £12,300 to £6,000 for individuals and from £6,150 to £3,000 for trusts.
Under measures set out by the previous Conservative government, the allowance halved again in 2024-25 and is now worth £3,000 for individuals and £1,500 for trusts.
HMRC has also increased its information gathering abilities about people who may owe CGT by, for example, gaining access to the data that crypto exchanges hold on customers.
Carey noted that the agency regularly shared information with foreign counterparts about people’s overseas financial assets, and that HMRC “has very good links with Land Registry”, referring to the agency that tracks ownership of land and property in England and Wales.
Kate Ison, partner at BCLP, said the law firm had registered “a huge amount of activity from HMRC in closing CGT inquiries in 2023-24, as they were under pressure from the government to increase the revenue yield from compliance activity”.
“There were a large number of inquiries which had been open for many years and — which had stalled in the pandemic — which were closed during this time,” she added, referring to the Covid-19 period, when HMRC cut the launch of new tax probes.
Steven Porter, partner at law firm Pinsent Masons, said there had been “almost a moratorium” on investigations during the pandemic but HMRC was now focused on recouping money spent by the government during Covid.
Wealthier people and large businesses were two groups that were most likely to be targeted for inquiries, Porter said, adding: “The richer you are, the more your overall wealth is made up of capital gains compared to the man on the street or the payroll person.”
Tax experts said property had become a particular focus for HMRC. CGT is due when someone makes a profit from selling a property that is not their primary residence.
Andrew Park, tax partner at accountancy firm Price Bailey, said the agency had grown “increasingly proficient . . . in using HM Land Registry data and cross-comparing it to taxpayer records, looking for undisclosed properties being sold which weren’t CGT exempt as the sellers’ main homes.”
HMRC said: “The link between compliance yield and cases opened and closed in a year is not straightforward. More complex cases take longer to resolve, across multiple years, whereas simpler ones will typically be dealt with in the same year.”
