As UK Chancellor Rachel Reeves delivers this year’s spring statement, we hear the latest reactions from the accountancy profession.
15:22, 26.03— Jon Claypole, Head of Tax Dispute Resolution at BDO: “While today’s Spring Forecast was mercifully light on new tax announcements, there were some notable measures designed to clamp down on unpaid tax debt and increase tax compliance.
“At the Autumn Budget last October, HMRC announced that late payment interest would increase by a further 1.5 percentage points from 6 April this year.
“Today, the Chancellor went one step further by increasing late payment penalties by 50% or more. These new penalties will apply from next month to businesses that fail to pay their VAT liabilities on time. These will then be extended to those who will start to pay income tax through the new Making Tax Digital regime for Income Tax starting in April 2026. This group will initially include sole traders and landlords with incomes above £50,000. From April 2027, this threshold will be lowered to £30,000 and from April 2028, this will include those with relevant incomes of more than £20,000.
“Currently if tax remains unpaid after day 15, the taxpayer incurs a penalty of 2% of the tax outstanding and if it’s still unpaid after day 30, the penalty is 4 per cent. These rates will rise to 3 per cent and 6 per cent respectively. An additional 10% per annum penalty will apply for tax overdue by 31 days or more.
“With businesses under increasing cost pressures this year, it’s like to get harder for HMRC to collect tax arrears. There is already an eye-wateringly high level of tax that’s owed to the Exchequer but remains unpaid. The latest figures suggest that tax debt levels have reached £44.3bn, more than double the level five years ago. Of this amount, £38.4bn is classed as being ‘available for pursuit’ while £5.9bn is being collected through Time to Pay arrangements.
“The Chancellor also announced new investment in compliance resource, a no-brainer for a Government seeking to increase receipts. Indeed, HMRC’s latest annual report found that every £1 spent on the compliance workforce delivered a return on investment of £22.
“The new investment of £100m is earmarked for the recruitment of an additional 500 compliance staff over the next five years, while £114m is for 600 more HMRC debt management staff. A further £87m is for HMRC to employ more third-party tax debt collectors.
“This is understood to be in addition to the Autumn Budget 2024 announcement that the government would recruit an additional 5,000 compliance staff and provide funding for 1,800 debt management staff.
“The Government is rightly keen to close the tax gap, the difference between what should be paid versus what is paid. The latest figures (for 2022-23) suggest that the UK tax gap is 4.8% of total theoretical tax liabilities, or £39.8 billion in absolute terms. This has also remained stubbornly high.
“The Chancellor also announced an expansion of HMRC’s counter-fraud capability to increase the number of criminal prosecutions against those suspected of tax fraud. This will include those who undermine legitimate trade and small business, as well as fraud committed by the wealthy and large corporations.
“In recent years, HMRC has tended to focus its efforts on cases where higher amounts are at stake, but there needs to be a credible deterrent at all levels to stop those who are intent on evading tax and committing fraud. Ultimately, those who don’t pay their fair share raise taxes on those that do.”
14:35, 26.03— Bruce Cartwright CA, ICAS CEO: “Based on today’s statement, there’s an awful lot riding on the promises being made by the Chancellor, especially given a largely lethargic economy. It will be the details behind those promises that will determine whether, come the Autumn, the Labour Government can really claim success.
“Promising improved GDP growth, as well as delivering more cost effective and better quality public services are major challenges in themselves. Doing all of this at the same time as decreasing the tax gap is a very tall order. As a result, we think Autumn will be crunch time, with the potential for a very tricky budget. “We heard a lot of promises with little detail around public sector productivity and reform. The Chancellor talked about planning reform and other growth policies to generate an extra £3.4bn to support public finances and services. But with possibly only six months until the Autumn Budget, there’s not a lot of time for the Government to improve performance. Reeves also failed to further incentivise business growth using levers already at her disposal.”
14:09, 26.03— Andrew Harding, FCMA, CGMA, Chief Executive – Management Accounting at AICPA & CIMA: “We welcome the Chancellor’s focus in today’s Spring Statement on reducing uncertainty, which should help support businesses with investments for long-term growth. However, to drive productivity, wealth creation, and ultimately economic growth, we must invest in skills training and development. Sadly, this is the second fiscal event where the Chancellor overlooked this crucial aspect. We hope that, come the Autumn Budget, enhancing skills will be prioritised to better support businesses and drive sustainable economic growth.”
13:34, 26.03— Chris Riley, Head of Tax at audit and accountancy firm PKF Littlejohn comments as follows: “As expected, the Chancellor’s speech did not contain many surprises on the tax front. She stayed true to her promise to keep the Autumn Budget as the main fiscal event, focusing on economic and spending updates, and taking broadsides at the opposition in time-tested fashion.
“Worth noting that HMRC has been given further spending to pursue tax investigations; also worth noting that there was plenty of discussion of boosting growth. But the big focuses were defense spending and public sector efficiency, both of which are set to feature heavily.
“With so many pressures on the economy, it will be interesting to see where we are in seven months’ time for the next Budget – the signs are there for even further fiscal squeezing.”
13:24, 26.03— Robert Marchant, Partner and Head of Tax at Crowe, comments: “Growth is the Chancellor’s “number one mission” but, other than organisations in the defence sector, many may be disappointed that there was very little in today’s Spring Statement to help them to grow. There are fiscal levers the Chancellor could have used such as providing businesses with access to finance for capital investments, making the UK more attractive to the wealthy and boosting the UK’s stock markets, and it will be interesting to see whether there are changes made in these areas in the future.”
13:04, 26.03 — Glenn Collins, Head of Technical and Strategic Engagement: “ACCA welcomes the announcement of additional investment in the digital capability of HMRC, with a focus on tackling tax evasion, however, we still see high levels of frustration with HMRC services from professional tax agents and taxpayers.
ACCA reiterates its stance that HMRC investment also needs to tackle key issues such as poor customer service and lengthy response times. Without this, the tax system will not be able to cope with the demands of Making Tax Digital and the UK’s increasingly complex tax landscape meaning errors become more commonplace.
ACCA continues to call for the use of professionally qualified agents to support complex queries, and improvements to communication first and foremost.”
09:31, 26.03— PKF Littlejohn Advisory partner Stephen Goderski said: “As the UK continues to navigate a complex financial landscape, the importance of a well-balanced approach to fiscal policy cannot be overstated. While addressing the immediate fiscal challenges, it’s vital that the government also lays the groundwork for long-term, sustainable growth. The plan to recalibrate economic policy in the face of rising borrowing costs and weakened growth projections will be critical in maintaining investor confidence and fostering economic stability.
“Equally, it is essential that any new measures announced in the Statement consider their impact on employment. Businesses are already facing rising operational costs and an increasingly difficult operating environment, so protecting jobs must remain a central priority. Ensuring that businesses, especially those in vulnerable sectors, are given the support needed to retain their workforce is crucial. Economic recovery must go hand-in-hand with job preservation and investment in the future of the UK labour market.
“The need for businesses to adapt and become more resilient in a volatile market has never been clearer. The Statement should set the tone for the fiscal policy ahead, not just the short term, but also the longer term. Businesses large and small across the country will be watching intently to see how the Chancellor’s next moves will impact their sector and their future prosperity.”
