Call for HMRC to clamp down on tax evaders

A report from the Bureau of Investigative Journalism (TBIJ) and TaxWatch has led to calls for HM Revenue & Customs (HMRC) to clamp down on wealthy tax offenders.

The bodies’ investigation found that HMRC has only prosecuted 11 wealthy individuals in the last year, despite the Revenue’s staffing budget for this type of investigation rising by around 54 per cent (from £13.6 million to £27.1 million) between 2016-17 and 2022-23.

Critics claim that these figures, obtained by Freedom of Information (FoI) requests, suggest that HMRC is doing too little to punish tax evaders at a time when the Treasury faces financial problems and ordinary people are struggling with the cost-of-living crisis.

Individuals are classed as wealthy if they earn more than £200,000 per year or have £2 million or more in assets.

Around 800,000 people in the UK fall into the ‘wealthy’ category, according to HMRC.  Most are entirely honest but there is a suspicion that more evade tax that the 100 who have faced prosecution since 2017.

HMRC has been accused of using its resources to pursue lower-risk civil penalties and settlements rather than risky and expensive criminal proceedings.

This approach has also been seen in less wealthy categories, with prosecutions falling by almost three-quarters across all income categories, from 887 in 2016-17 to 240 in 2022-23.

Over the same period, criminal convictions fell from 808 to 218, although the number of new investigations last year did increase from hitting a low during the pandemic.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “HMRC is often focussed on recovering the maximum sum in taxes and penalties and will sometimes accept financial settlements in return for not pursuing a criminal prosecution.

The extent to which the prosecution of tax evaders acts as a deterrent to others is unclear and there is an argument that public funds are better spent recovering unpaid taxes than putting offenders behind bars.

In the most serious, so-called COP-9 enquiries, forensic accounting and specialist tax advice will be crucial in determining, not only whether the tax-payer who is under suspicion is prosecuted but also what level of penalties are applied.”


Source: TB

Posted in The Forensic Blog.