HMRC Fraud Prosecutions Soar

26 April 2013

The number of individuals prosecuted by HMRC for tax fraud soared by 53% in the past year, according to the law firm, Pinsent Masons.

With figures obtained via a freedom of information request, the increase shows the Revenue’s increased compliance efforts and more “aggressive” approach were beginning to bite.

The increase follows the Chancellor’s 2010 Budget commitment to give HMRC an extra £900m to counter tax avoidance and evasion.

According to the newly obtained data, HMRC launched prosecutions against 240 individuals last year, up from 157 the year before.

Jason Collins, head of tax at Pinsent Masons, said HMRC has adopted a very aggressive stance when investigating individuals suspected of tax fraud.

“It is much more willing to opt for the criminal – as opposed to civil – investigative weapons in its arsenal. Arrests, prosecutions and property searches have all leapt since 2010,” he said.

Collins told AccountingWEB that HMRC's tax taskforces were driving some of this extra activity: “It’s one of the best ways of trying to find individuals who have engaged in tax evasion and in making a decision about whether to prosecute.”

The law firm urged HMRC to focus some of its funding on improving civil procedures for bringing in potentially missing taxes, rather than concentrating on criminal investigation activity alone.

“Civil procedures and amnesties can be a very cost effective way to boost tax yields. The Liechtenstein Disclosure Facility is an effective ‘amnesty’ for dealing with tax evasion, but other options are limited, especially for individuals wanting to come clean with HMRC over legacy tax avoidance issues, particularly as some bought tax schemes when the climate for these things was very different,” Collins said.

An HMRC spokesman responded to the new data: “The government have given HMRC almost £1bn to tackle tax evasion, fraud and avoidance. HMRC are using this money to increase staffing in key teams, deliver an additional £20bn and increase criminal prosecutions for tax fraud five fold by the end of the 2015.

"The vast majority of taxpayers are honest and pay what they have to under the law, so it is only right that we tackle the small minority of cheats who deprive the country of vital revenues.”

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