Tackling tax evasion in high street and online retail

HMRC should demonstrate it has a sufficient strategic focus to tackling tax evasion in key areas of risk. This should include: ? regularly setting out how it is bearing down on tax evasion and other forms of deliberate non-compliance in line with its strategy, including an assessment of the effectiveness of preventative controls and how it is holding tax evaders responsible for deliberate evasion, rather than general non-compliance; and ? further developing how it analyses, measures and reports its performance and outcomes in tackling evasion, such as the number of penalties it issues for tax evasion and the associated compliance yield

Ref Page 14, A · Implemented Q4 2026-27

HMRC should evaluate the extent to which it is using the range of investigatory and enforcement powers it has for tackling tax evasion, establish what barriers it faces to using specific powers, and identify whether there are any gaps that limit the actions it can take. In relation to the areas on which this study focused, this should include HMRC?s powers to: ? investigate the use and supply of ESS technology; ? direct traders based overseas to appoint a VAT representative in the UK; and ? verify UK establishment for VAT registrations

Ref Page 15, J · Implemented Q4 2026-27

HMRC should take a leadership role in working with other relevant parts of government to develop a shared understanding of the drivers of tax evasion and a more joined-up approach to tackling it. This should include considering inter-dependencies between tax evasion and wider risks and controls that sit elsewhere in government

Ref Page 14, B · Implemented Q2 2025-26

HMRC should work with relevant partners in government to assess what end-to-end system across government would be most efficient and effective in tackling tax evasion by businesses. HMRC should work with Companies House and the Insolvency Service, and each should assess whether it has the resources and capabilities to prevent, detect and respond to tax evasion cost-effectively. This should include whether relevant teams have the capacity and expertise to identify whether there is deliberate evasion, and whether enforcement action is likely to maintain a credible deterrent effect.

Ref Page 14, C · Implemented Q2 2025-26

HMRC and Companies House should ensure they work together to develop and implement further improvements to the way that businesses register as a company and register for corporation tax and VAT. This should include considering additional powers for Companies House to verify addresses; which organisation is best placed to manage relevant controls; the resources and capabilities needed; and any wider benefits and risks of such changes.

Ref Page 14, D · Implemented Q4 2027-28

HMRC should work with key stakeholders to ensure the arrangements making online marketplaces liable for VAT from overseas sellers are effective in preventing evasion, and explore areas where closer working with HMRC could increase tax revenue cost-effectively. This could involve working with online marketplaces to establish what reasonable steps they should take to determine whether sellers are UK-established based on their different risks and business models, and to identify what further support HMRC can provide through advice or data

Ref Page 14, E · Implemented Q3 2025-26

HMRC should tighten controls to prevent tax evasion. As part of this, it should understand the effectiveness of controls adopted in other countries and assess the appropriateness, feasibility and potential costs and benefits of introducing similar controls in the UK. This could include: ? routine verification of UK establishment for VAT registrations, including with reference to verified addresses or other data; ? transaction-based reporting, requiring businesses to regularly report transaction data; and ? mandatory use of electronic cash registers

Ref Page 15, F · Implemented Q4 2025-26

HMRC should assess the risk posed by online marketing of services to enable tax evasion and develop an appropriate response. This should include working with online platforms to explore opportunities to address the risks, and considering feasibility of working with overseas authorities.

Ref Page 15, G · Implemented Q2 2025-26

HMRC and the Insolvency Service should work together to set out how they will tackle phoenixism and monitor the effectiveness of their work. This should include determining a shared definition and understanding of phoenixism and barriers to enforcement action and, where relevant, engaging with other relevant public bodies and local authorities

Ref Page 15, H · Implemented Q4 2025-26

HMRC should develop a systematic way to identify and share common lessons from evaluations across its compliance projects and feed this into its plans to tackle evasion. It should use this approach to embed a culture of learning and continuous improvement.

Ref Page 15, i · Implemented Q4 2025-26