The Margaret Hodge Effect

Could HMRC be feeling the ‘the Margaret Hodge effect’?

With recent reports suggesting that the Revenue could be struggling with a ‘huge backlog’ of criminal tax cases, concerns arise as to whether HMRC are suffering the ‘the Margaret Hodge effect’.

As tax circumstances are looked into following a recent clampdown on tax avoidance, HMRC have been accused of being overloaded, with a reported 41,000 enquiries into businesses and individuals currently ‘being worked on’.

After a serious initiative from HMRC into combatting tax avoidance was launched two years ago, 240 prosecutions were made last year, a jump of 53% on 2011, with that number continuing to rise.

According to reports made by established law firm Pinsent Masons, there are doubts about the Crown Prosecution Service’s (CPS) ability to deal such an increased caseload, making hard work for the Revenue with more cases than they can handle.

The fight against tax avoidance has been gaining momentum within the Revenue for some time now, and although HM Revenue & Customs has denied claims that they are struggling, the 41,000 cases that are currently in process seems a worryingly high amount.

As quoted in the Daily Telegraph, Pinsent Masons has labelled HMRC’s actions as a result of “the Margaret Hodge effect,” claiming that the Revenue fear the repercussions of their actions brought about by Hodge and the Public Accounts Committee, stopping them from doing deals with businesses.

Despite concerns, the Revenue have denied any un-manageable backlog, and have stated that these built up cases would be “resolved through the avoider paying up or the case going to court.” As for the Margaret Hodge effect, let’s hope that there will not be an epidemic.