HMRC fraud prosecutions up 53% percent

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The number of individuals facing prosecution by HMRC for tax fraud has risen by 53% over the past year, according to research by law firm Pinsent Masons, reports accountant Northampton Harris & Co.

The firm’s analysis shows HMRC is currently prosecuting 240 individuals compared with 157 in the previous twelve months. Arrest and conviction rates are also rising, with a 7% increase in the number of arrests made by HMRC in relation to tax fraud (151 this year compared with 141 the year before). Convictions are up by 4% to 154 last year, from 148 the year before.

Jason Collins, head of tax at Pinsent Masons, said:

‘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 calculates that since extra funding for HMRC to tackle tax avoidance and tax evasion was announced at the 2010 Budget, the number of arrests for tax fraud has increased from 105 in 2009-10 to 151 last year – a 44% increase.

Collins said:

‘HMRC has been using the £900m in extra funding for tax avoidance and evasion work announced in 2010 to increase the number of criminal investigations it opens and the speed with which it gets cases to the Crown Prosecution Service (CPS).’

But Collins cautioned that the increased tax fraud caseload could cause difficulties for the CPS.

He continued:

‘While HMRC may have benefited from extra funding from the government to deal with tax fraud, the CPS hasn’t. Despite the CPS’ intention to increase their tax fraud conviction rate, they have told us they will be relying on existing budgets to do so. The danger here is that a bottleneck may emerge if cases go through HMRC processes swiftly, but the CPS is unable to keep up.’

Pinsent Masons says that HMRC should focus some of its funding on improving civil procedures for bringing in potentially missing taxes, rather than concentrating on increasing its criminal investigations activity alone.

Collins also argued that there should be an improved amnesty for tax avoidance schemes, saying:

‘The Liechtenstein Disclosure Facility (LDF) is an effective “amnesty” for dealing with tax evasion, but other options are limited, es

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