22 Apr 2013 12:38pm

Tax fraud prosecutions double

HMRC's more aggressive approach to prosecuting individuals for tax fraud has seen a 53% increase in prosecutions, according to research from Pinsent Mason

Last year the number of prosecutions launched jumped to 240 from 157 in 2011. The number of arrests also went up, by 7% to 151, as did the number of individuals convicted of tax fraud, up 4% from 148 to 154.

The international law firm points out that, since extra funding was announced in the 2010 Budget to enable HMRC to tackle tax avoidance and tax evasion, the number of arrests for tax fraud has increased by 44%.

“HMRC has been using the £900m in extra funding to increase the number of criminal investigations it opens and the speed with which it gets cases to the Crown Prosecution Service,” said Pinsent Masons’ head of tax Jason Collins.

“HMRC has adopted a very aggressive stance towards 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.”

The firm is calling on HMRC to use some of the funding on improving civil procedures for bringing in potentially missing taxes, rather than focusing it solely on increasing criminal investigations activity. It says that civil procedures and amnesties are a 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 adds.

“HMRC has relied on the Contractual Disclosure Facility to allow people to settle tax avoidance-related debts, but this route has several drawbacks for taxpayers. Similarly, HMRC announced a partial amnesty for those using avoidance schemes before Christmas, but the proposals need plenty of clarifications – and in all honesty to provide more of a ‘deal’ on legacy planning if there is going to be strong take-up.”

The firm also raises doubts about the CPS’s ability to deal with the increased tax fraud caseload.

Julia Irvine


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