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HMRC defends its record on criminal prosecutions

HMRC is sticking to its annual target for criminal prosecutions of tax evasion despite criticism from MPs that it is ‘failing’ UK taxpayers.

HMRC hopes to make about 1000 criminal prosecutions for tax evasion in 2015-2016, keeping the same target as the previous three years.

An HMRC spokesman told AccountingWEB that it had exceeded its target of 1000 criminal prosecutions in each of the past three years. Last week, a committee of MPs said HMRC was ‘failing’ UK taxpayers because it wasn’t making enough prosecutions for offshore tax evasion and also its poor customer service.

MPs on the Public Accounts Committee said that the 11 prosecutions for offshore tax evasion in the past five years was "woefully inadequate". HMRC’s failure to gather intelligence on losses through aggressive tax avoidance as an obstacle to improving UK tax laws, the committee also said in a report.

In response to the report, HMRC said that the number of tax avoidance schemes had declined steadily due to “tough government action”. HMRC is taking a tougher line in some aspects of tax evasion, according to recent figures.

The number of raids on premises carried out by HMRC during investigations into tax evasion increased by almost a fifth (18.6%), rising from 500 in 2013/14, to 593 in the year to March 31, 2015, according to Pinsent Masons, a law firm.

The number of such raids carried out has trebled in the last four years, Pinsent Masons said in June.

HMRC has also limited the options for people suspected of tax fraud by changing its use of the Code of Practice (“COP9”) procedure, when people make voluntary disclosures of tax owed, according to a blog by David Sleight, a partner at Kingsley Napley, and Edmund Smyth, an associate at the same law firm.

In 2014, HMRC reformed its Contractual Disclosure Facility (CDF) under COP9, to remove from those suspected of tax fraud the option of “denial” (which despite its name in fact involved engagement and cooperation), leaving only the “stark choice for the suspect between on the one hand admitting fraud and entering into a contractual agreement to make full disclosure, and on the other refusing cooperation and inviting prosecution,” Sleight said.