Budget 2025 - Strengthened HMRC enforcement powers and closing the "tax gap"

27th November 2025

The Budget 2025 strengthens HMRC's capability to pursue tax avoidance and evasion: it increases the rewards paid to informants who supply valuable information that leads to recovery of unpaid taxes (for high-value cases—above £1.5 million).

The government will introduce enhanced powers and sanctions against tax-advisers who facilitate non-compliance — effective from 1 April 2026.

The Budget also plans to disqualify more "rogue directors" abusing insolvency processes to evade tax. The relevant rules under the Company Directors Disqualification Act 1986 will be amended accordingly.

For small businesses, the government will establish a new dedicated enforcement team targeting evasion, employing 350 new criminal investigators through HMRC's Fraud Investigation Service.

● Additional border- and trading-standards enforcement

The Budget allocates funds for border enforcement — for example, directing up to £10 million from HMRC to Border Force in 2026-27 to enhance operational information-gathering capabilities, especially relevant ahead of new duties (e.g. vaping product duty).

It also includes more funding to support wider trading-standards and law-enforcement efforts (including extra trading-standards officers) to clamp down on illicit trade, under-declared goods, and non-compliant products sold online.

What This Means for Sellers, Marketplaces, and Importers — Under HMRC’s Watch

Once the low-value import relief is removed, sellers or marketplaces must properly declare all imports, even small parcels, and pay the right customs duty. Failure to do so may result in enforcement.

Marketplaces and platforms selling to UK consumers will need to implement systems to collect, declare and remit duty + VAT to HMRC — or face sanctions if they fail to comply.

Companies and advisers that attempt to structure business to avoid tax (e.g. survive as "shell" sellers, misuse insolvency, or under-declare VAT/duty) will face more aggressive HMRC action, including criminal investigation or director disqualification.

HMRC is stepping up intelligence-led enforcement, including incentives for whistleblowers (informants), greater border checks, and increased staffing for investigations — meaning non-compliant behaviour will have higher likelihood of being caught.

The reforms signal that the government wants to reduce the “tax gap” — that is, the difference between what is owed in tax and what is actually collected — through stronger compliance, better data collection, and tougher sanctions.