News
Danny McCance 19 Mar 2019 11:55am

HMRC targets professional services tax evasion

HMRC issued 1,414 production orders to accountancy, law and other professional services firms in relation to investigations into tax evasion

The orders, issued by the Revenue’s Criminal Investigation Directorate between March 2017 and 2018, to third parties such as accountants and lawyers request they surrender potentially incriminating information on their clients.

This is down slightly on the 1,507 orders sent between March 2016 to March 2017, which spiked from 1,276 the previous year.

However, according City of London law firm RPC, HMRC is increasing the number of criminal investigations into those participating in arrangements designed to cut their tax bills.

This could include employee benefits trusts and film financing investments, RPC said.

Whereas the Revenue previously preferred to take civil action against such individuals using tax tribunals, now it is launching criminal investigations.

Adam Craggs, partner at RPC, said, “HMRC's policy of commencing criminal investigations into taxpayers who have participated in tax planning arrangements is concerning.”

He added that even the commencement of a criminal investigation can have “serious practical difficulties” for businesses, and the length of these investigations can cause “a great deal of stress”.

HMRC challenged this assessment. “Tax planning isn’t a crime and HMRC only criminally investigate arrangements presented as avoidance or tax planning if it suspected they were actually fraudulent,” a HMRC spokesperson said.

In 2017, the Supreme Court ruled in HMRC’s favour in the long running legal battle with Scottish football club Rangers over employee benefits trusts.

Topics