Tax evasion falling

Cases of serious tax evasion have fallen to the lowest level for five years, according to a report by Pinsent Masons which says HMRC’s anti-evasion initiatives are showing results say Harris & Co accountants Northampton who specialise in providing accountancy services to small and medium sized businesses.

According to analysis by the law firm, in the year to March 31 local HMRC offices identified 2,888 suspected cases of serious tax evasion – a 16% drop on the 3,456 reported the previous year and 36% down from 2011 levels.

HMRC defines cases of serious tax evasion as those involving £50,000 or more, or where prosecution would be possible. These cases are then passed on to the central ‘Evasion Referral Team’.

Pinsent Masons partner Phil Berwick said:

‘This decline in suspected tax evasion doesn"t tally with the rhetoric from some quarters that the British economy is being undermined by a chronic under-collection of tax revenues. HMRC has plenty of tools at its disposal to catch tax evaders which serves as a huge deterrent to those considering tax evasion.’

Berwick said increased international co-operation has made it harder for individuals to conceal assets abroad, while new measures such as penalties of up to 200% of the original tax owed for failure to declare income or capital gains held in an offshore account were having an impact.

Berwick continued:

‘Five years ago some individuals and businesses perhaps felt that evading tax was relatively easy. Now they can see that HMRC is much more proactive and better informed than in the past. Increasingly, they are deciding that tax evasion just isn’t worth the risk.’

This week HMRC has published figures on its receipts for the tax year just ended, plus earlier years. These show that total receipts were little changed at £468bn in 2012-13. Income tax receipts have dropped by about £2bn over the last three years, while NICs are up by £6bn. VAT receipt have increased the most, rising by £17bn to some £100bn in 2012-13, compared to around £83bn in 2010-11.