Autumn Budget: HMRC Targets 600 Prosecutions per Year in Major Compliance Expansion

The Autumn Budget confirmed a significant escalation in HMRC’s enforcement activity, with a new target of 600 prosecutions per year. This represents a major expansion in compliance operations and signals a clear shift towards tougher action on tax evasion, avoidance, and non-compliance.

The increased scrutiny will affect a wide range of taxpayers — from individuals to company directors — and certain sectors are expected to face more intensive investigation.

What Has Been Announced?

HMRC will:

• Scale up its investigation capacity
• Target 600 criminal prosecutions per year
• Focus on deliberate non-compliance, hidden income, and inaccurate filings
• Apply stronger penalties and pursue prosecutions where appropriate
• Increase compliance checks across multiple sectors and tax types

This forms part of a broader government effort to increase tax revenue through improved enforcement rather than purely through new tax measures.

Why This Matters

A target-driven compliance strategy means:

• More investigations
• More interventions
• More penalties and criminal charges
• More director accountability
• Higher risk for businesses with weak controls

HMRC will become more proactive, running more checks and taking more cases forward — including areas historically seen as low enforcement priorities.

Sectors Likely to Be Targeted

Although HMRC can investigate any taxpayer, certain sectors are traditionally considered higher risk due to cash usage, complex supply chains, or historic compliance issues.

The following sectors are likely to face increased attention:

1. Construction and labour supply chains

Ongoing compliance issues around employment status, payroll, umbrella companies and CIS deductions.

2. Hospitality and retail

Cash handling, tronc systems and tip reporting remain key risk areas.

3. Online sellers, influencers and digital creators

Rapidly growing income streams combined with inconsistent record-keeping increase compliance risks.

4. Contractors and personal service companies

IR35, off-payroll working changes and employment status checks are continuing focus areas.

5. High-value goods and property transactions

Income mismatches, undeclared rental income and capital gains are common triggers.

6. Fraud-sensitive sectors

Markets where HMRC has seen avoidance or evasion in the past — including VAT fraud, R&D claims, and supply-chain payroll.

These are not the only sectors at risk — but they represent the areas most likely to see increased activity with HMRC’s enlarged enforcement capacity.

Increased Focus on Directors and Personal Liability

The Budget emphasises that directors will face more personal responsibility under this expanded compliance regime.
HMRC may:

• Pursue directors personally for certain unpaid taxes
• Use joint and several liability powers more often
• Apply penalties where directors fail to take reasonable steps
• Treat negligence or inaction as grounds for penalties
• Increase scrutiny of director loan accounts, PAYE compliance and VAT behaviour

For companies operating in higher-risk sectors, director oversight will be particularly important.

What This Means for Businesses

Businesses should prepare for:

• More compliance enquiries
• More requests for records and explanations
• Increased enforcement around PAYE, VAT, CIS and corporation tax
• Greater scrutiny of expense claims, payroll and director remuneration
• Potential penalties for careless or inaccurate submissions

Even businesses with good intentions may find themselves under review if records are incomplete or processes are weak.

Practical Steps to Prepare

1. Strengthen record-keeping

Ensure financial, payroll and VAT records are complete, accurate and easily accessible.

2. Review PAYE and employment status

Particularly important for businesses using contractors, off-payroll workers or umbrella companies.

3. Check VAT compliance

Common triggers include missed deadlines, inconsistencies, or reclaim errors.

4. Review director compliance

Ensure all director loans, benefits and remuneration structures are correctly recorded and reported.

5. Consider voluntary disclosure if needed

If errors have been identified, addressing them early can reduce penalties significantly.

6. Stay alert to sector-specific risks

Some industries face ongoing targeted campaigns — proactive compliance can prevent costly issues later.

Summary

HMRC’s move to 600 prosecutions per year marks a clear shift towards more aggressive compliance and enforcement.
With increased scrutiny across multiple sectors and expanded liability for directors, businesses must ensure their tax affairs are accurate, well-documented and fully compliant.

For those concerned about exposure or seeking to strengthen compliance processes, Merranti Accounting can provide proactive reviews, tailored advice and ongoing support to reduce risk and ensure peace of mind