HMRC and Criminal Cases

Is the Taxman’s Grip on Criminal Cases Slipping?

HMRC managed to secure 157 criminal convictions up to 30 September 2009 some 62 fewer than for the period to September 2008.

Why is this? It seems HMRC are worried about taking cases to criminal prosecution because of the risk of losing in front of a Jury.

Over the last number of years HMRC has launched a few tax amnesties aimed at various sectors. So far there has been the New Disclosure Opportunity, the Liechtenstein Disclosure Facility and recently the Tax Health Plan, this is aimed at Doctors who may have omitted some income from their tax returns. These measures are expected to bring in over £3bn, still far short of the £7bn believed to have been lost from evasion during 2009/10 alone.

So, will HMRC up their game? In short the answer is yes, it is very likely that once the tax amnesties are over HMRC will criminally prosecute anyone who should have used the disclosure facility but failed to do so. Such individuals will probably be deemed to have deliberately concealed income from HMRC with the intention of evading tax and as such could face being dragged through the criminal courts.

It is widely thought that those charged with evasion will face stiffer penalties including longer prison sentences. Such tactics could make those people who fail to pay their taxes think carefully about playing cat and mouse with HMRC.

A spokesman for HMRC stated:

“HMRC tackles fraud very effectively and does not hesitate to use its criminal investigation powers to pursue a prosecution, where appropriate.

“However, cost-effective civil settlements procedures are used in most tax evasion cases.

“This represents excellent value for the Exchequer as all undeclared tax is repaid by the tax cheat and additionally they pay a penalty which can be up to 100% of the tax evaded.

“Our approach to prosecution is selective. If the circumstances justify criminal prosecution then that’s what happens.

“We collect billions of pounds of evaded tax using these well established methods”.