Recent press comment suggests that 25 per cent of tax prosecution cases involve tax lost of just £10,000. This raises concerns that HMRC is letting down the public by targeting only the low-hanging fruit and is thus soft on criminal tax investigations.
Is that view unfair on the taxman? Or is it more the case that this is the calm before the storm?
Armed with a raft of new methods of obtaining information about business transactions, properties, bank accounts and other investments held by those resident in the UK, HMRC is keen to ensure that people who evade taxes are more readily identified, robustly brought to book and made to properly face up to their obligations. Whilst in the vast majority of cases this will still result in a civil financial settlement, there appears to be little doubt that in the very near future the department intends to concentrate on higher-value cases rather than the lower-level ones.
Indeed, by setting aside an additional £60m by the end of this Parliament, the Chancellor confirmed that more officers would be re-allocated to criminal investigation work targeted at high net worth individuals, with 100 cases a year arising from this group. This all ties in to the recent merger of its hitherto separate (civil) Specialist Investigations and Criminal Investigations teams. HMRC envisages that this will produce a healthy mix of trained tax investigators and criminal lawyers joining up to more cost-effectively tackle tax fraud. In other words the clear message is that those cheating the system will be tracked down and potentially investigated with a view to criminal prosecution.
Add to this the promise of a three-fold increase in criminal tax investigations and the measures which will soon bring into play a ‘Strict Criminal Liability’ power for offshore tax irregularities, and we can see that HMRC now means business when it comes to pursuing more taxpayers down the criminal track rather than the civil.