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Danny McCance 3 Sep 2018 10:59am

HMRC opens 27 new serious tax evasion cases

HMRC reportedly opened 27 new investigations into suspected serious tax evasion by some of the UK’s top businesses in the last year

The cases involve 27 of the UK’s top 2,100 businesses and are defined as cases involving more than £50,000 in tax or where prosecution is possible. The figures are based on a HMRC disclosure, according to international law firm Pinsent Masons.

However, as Jason Collins, partner at Pinsent Masons, explains, being under investigation for serious tax evasion is not the same as serious tax evasion actually taking place.

“Our view is that no board and no head of tax would allow even the hint of tax evasion at their company,” Collins said.

“But without proper controls, there is always the risk of a member of staff going rogue,” he added.

Collins said there had been an assumption that tax avoidance had been “all but stamped out” and that the last decade has seen a decrease in the number of companies accused of enabling tax evasion, However, he also said the Criminal Finances Act 2017 could create issues.

“Many businesses are still in the process of rolling out new procedures to comply with the Criminal Finances Act and, in doing so, irregularities could be uncovered.”

“[Businesses] will need to ensure they have robust prevention procedures in place, particularly with regards to their supply chains,” Collins suggested.

The firm added that recent evasion cases involving UK and European companies have mostly involved the financial services and professional services sectors.

However the research also found a 24% jump in referrals for investigations into serious tax evasion by individual taxpayers or small businesses, up to 3,204 cases last year (compared to 2,586 the previous year). Meanwhile investigations into wealthy individuals and mid-sized business have largely remained flat.

“With increased global information sharing among tax authorities, HMRC has access to even more taxpayer data to crack down on any suspected tax evasion,” said Collins, referring to the roll-out of the Common reporting Standard.

In October last year, HMRC introduced this new criminal offence targeting individuals who have income or gains outside of the UK and evade UK income or capital gains tax.

This followed the Criminal Finance Act 2017, which gave HMRC greater tools to prosecute facilitation of tax evasion by corporates by making them liable for employees, agents or those providing services.

HRMC has been contacted for comment.

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