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Number Of Individuals Prosecuted By HMRC Doubles

by Robert Lee, Tax-News.com, London

25 April 2013


HM Revenue and Customs' (HMRC's) stance toward individuals suspected of tax fraud has become "very aggressive," new research has claimed.

Research by international law firm Pinsent Masons found that the UK's revenue agency launched 53% more tax fraud-related prosecutions in 2012 than the year before. Case numbers leapt from 157 to 240, while the number of arrests made rose by 7%. Convictions increased by 4% to 154.

According to Jason Collins, Head of Tax at Pinsent Masons, HMRC is now "much more willing to opt for the criminal - as opposed to civil - investigative weapons in its arsenal." One result of the GBP900m (USD1.37bn) in extra funding allocated to HMRC for anti-avoidance and evasion work is that "any attempts to deceive HMRC, or even serious compliance errors, are now much more likely to be picked up on and end up in the courts."

Collins is however concerned that the Crown Prosecution Service's (CPS's) ability to deal with the increased caseload may be limited. He explained, "While HMRC may have benefited from extra funding from the Government to deal with tax fraud, the CPS hasn't. Despite the CPS's intention to increase their tax fraud conviction rate, they have told us they will be relying on existing budgets to do so."

The danger is that were the CPS unable to keep up with HMRC, "both HMRC and defendants could be left in limbo waiting for the CPS to work through what could become a huge backlog."

Collins would like to see greater emphasis placed on civil procedures or on the improvement of the available disclosure facilities and amnesties. While the Liechtenstein Disclosure Facility has proven effective, Collins warned that other options are limited, particularly for those with "legacy tax avoidance issues."

"Criminal investigations are only part of the broader picture that HMRC needs to consider when boosting tax yields. An improved amnesty for tax avoidance schemes should be part of the mix too," Collins stressed.

TAGS: individuals | court | compliance | tax | business | tax compliance | tax avoidance | tax incentives | law | budget | Liechtenstein | United Kingdom | tax authority | tax planning | HM Revenue and Customs (HMRC) | revenue statistics | tax reform | HM Revenue and Customs (HMRC)

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