The VAT changes that weren’t in the Budget

Whatever your views on the Budget there is no doubt that the sheer scale of the changes marked a sharp shift in policy from the previous government. Beyond the headline measures that were announced it is clear that the government is counting on a significant return on its investment in HMRC. This article considers what this could mean for VAT and HMRC’s approach to managing the tax.

Among the flurry of Budget announcements HMRC quietly released the latest VAT gap statistics which revealed that the VAT gap is estimated to have grown by £1.4bn to £9.5bn in the 2023-24 tax year. With somewhat more fanfare the government has announced that in the six years to 5 April 2030 tax receipts will rise £6.5bn by investing in 5 000 more HMRC compliance officers.

Our estimates suggest that HMRC will expect around £1.3bn more VAT receipts...