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HMRC crackdown pushes tax evasion prosecutions up by a third

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13/10/2014
The number of people being pursued through the courts for tax evasion has risen by almost a third in the last year, as HM Revenue & Customs (HMRC) steps up its efforts to close the UK's £35bn tax gap.

Prosecutions hit 795 in 2013/14, up from 617 in 2012/13, according to figures compiled by information gatherer Thomson Reuters.

However this 29 per cent increase is expected to be surpassed next year – with a 47 per cent rise forecast.

HMRC has set a target of 1165 prosecutions in 2014/15, meaning that prosecutions will have to jump by almost 50 per cent in just one year to meet that target.

The Revenue service’s increased focus on prosecuting tax evaders has been reinforced by the upcoming introduction of a new criminal offence for taxpayers who fail to declare offshore income or gains.

Under plans announced in August, HMRC will only need to show that the money held offshore was taxable and undeclared, unlike the current regulations whereby HMRC must prove someone holding undeclared offshore income had intended to evade tax.

“HMRC has got suspected tax evaders firmly in its sights, taking more and more cases to the criminal courts in an effort to clampdown on this area,” said Emma Nendick, head of tax at the Practical Law service, a part of Thomson Reuters.

Criminal records and prison sentences “are not just an idle threat”, she said, adding that the increasing volume of criminal prosecutions is one of the measures by which HMRC now judges its success.

“Whilst public attention has recently been focused on tax planning by corporates and high net worths, the legal profession is seeing a marked increase in criminal cases,” said Nendick.

“For HMRC, criminal prosecutions have a useful deterrent effect even on those areas of tax avoidance that are very clearly outside of the criminal courts.”

What may start out as a civil investigation – an enquiry into possible tax avoidance – can turn into a criminal prosecution if materially false statements are made or false documents are provided in the course of a civil investigation.

Also if deliberate concealment, deception, conspiracy or corruption is suspected in the case.

 

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