The UK tax authority has prosecuted only eight cases in the past two years for the enabling of tax evasion, despite pledging to pursue the lawyers, accountants and financial institutions that help clients carry out tax fraud.
Instead, there has been a steep drop from the 43 prosecutions brought by HM Revenue & Customs in the two years before the Covid-19 pandemic, according to a response to a Freedom of Information request submitted by the Financial Times.
“The government’s rhetoric on cracking down on tax evasion, aggressive avoidance schemes and those who promote them is essentially not being followed through by HMRC,” said Nimesh Shah, chief executive at the accounting firm Blick Rothenberg.
John Hood, tax partner at accounting firm Moore Kingston Smith, who used to work at HMRC, said its limited resources meant “there are very few barriers for individuals to set up businesses that promote aggressive structures”.
The collapse in prosecutions of tax evasion enablers comes as HMRC is under intense pressure to recoup lost tax revenue. A report by the National Audit Office, parliament’s spending watchdog, in December revealed that a sharp fall in investigations over the pandemic had cost the government as much as £9bn.
The overall tax gap in the UK — the estimated difference between tax owed and tax paid — was around £32bn in 2020-21, the latest year for which data is available.
In an interview with the Financial Times in January, Simon York, HMRC’s head of serious fraud, said the agency was intent on pursuing the financial and professional services firms that facilitate tax evasion as well as evaders themselves, noting that this required more collaboration with international counterparts.
The number of prosecutions fell over the pandemic, partly owing to court closures, while lockdown restrictions affected the agency’s ability to develop cases.
But tax professionals are concerned that a lack of enforcement by HMRC, which employs 5,000 people in its fraud investigation service, weakens the deterrent effect of the legislation designed to prevent the facilitation of tax fraud.
“The current low number of prosecutions naturally means that these matters are afforded less attention than other matters which are perceived to be greater risk,” said Nicholas Gardner, a partner at law firm Ashurst.
The FOI request also revealed that HMRC has 102 live investigations into professional enablers of fraud, down from 153 in May 2021.
In 2017, the government brought in legislation, known as corporate criminal offences, which made it a crime for corporations to fail to put in place “reasonable procedures” to prevent facilitation of tax evasion. But it has yet to make any corporate criminal offence charges and the latest figures showed just nine live investigations.
John Cullinane, director of public policy at the Chartered Institute of Taxation, said there was a “strong case” for wider use of prosecutions by HMRC. But he cautioned that there was a risk of failed prosecutions taking up time and resources, resulting ultimately in a lower tax take for the Revenue, at least in the short term.
“Our preferred approach would be a public consultation on prosecution policy, to discuss the overall approach and the trade-offs needed to achieve that,” he said.
HMRC said tackling enablers of tax fraud “remains a top priority for us”.
“We’ve always been clear that we focus criminal investigations on cases where the behaviour is particularly severe, where civil sanctions alone won’t work, and where criminal prosecution will be a strong deterrent to others.”
>HMRC said tackling enablers of tax fraud “remains a top priority for us”.
It certainly isn’t for the ~~crooks~~ policy makers currently ruling this country and their families /friends / business partners, given that they are massive offenders.
43 prosecutions in 2 years is not even low effort, it’s evidence of HMRC’s leadership being accomplices to this mess.
It would be interesting to see the profile of the companies under investigation – the only possible defence is that with limited resources their targeting fewer, but bigger, cases.
Even as I type that I realise how unlikely this is though.
No wonder there is no money for nurses and teachers.
However this is unsurprising. Zahawi was sacked as Chair of Tories for the crime of being exposed. No doubt Zahawi would still be in post if he hadn’t have been publicly rumbled. Zahawi isn’t the illness, he is just a symptom.
By tradition, the chair **or** deputy chair **or** treasurer of the Conservative Party is usually a major $$$ businessman $$$ with wealthy business owning friends, capable of giving large amounts of money.
**Lord Michael Ashcroft**
Treasurer of the UK Conservative Party. One of the largest donor of the UK Conservative.
You think these people give massive amounts of money….to be prosecuted?
I was always struck by Sir John Harvey Jones talk on the BBC about twenty years ago, he told a little story.
When the tax inspector came to your office the CEO, FD and Board representative all attended nervously and everyone braced themselves for a bill.
In his experience a usual experience was an adjustment ie you had to pay or reclassify an asset etc.
Either way you ended up being told more to pay and you paid.
Now when he is in companies the inspector doesn’t arrange a visit the company calls them in and when they do the FD, CEO and operations manger attend all negotiating with things they want tax relief on and the inspector gives them an adjustment and the company receives a check.
Can’t help thinking isn’t this were it all went wrong..
Its not really surprising when you consider that its only three years ago that the Attorney General was found to be living full time in a tax haven earning £1.4k an hour, tax free, defending drug dealers, while simultaneously charging the taxpayer for a second home in London (that he needed) despite being 4,000 miles away and getting colleagues to vote on his behalf.
And to make matters worse when it was discovered he was allowed to remain an MP and was later knighted for his ‘services’ to politics.
They also shut several offices and reduced the number working on complex casework…why are they doing this? Well the Institute of Directors had this to say in 2015
> “The announcement of another HMRC restructure will be met with predictable concern that fewer people answering calls could result in lower revenue. But that simply need not be the case. The number of employees should not be seen as a proxy for HMRC’s effectiveness as a tax collector. The United States Internal Revenue Service serves a population five times the size of the UK, but has only 60% more staff”
The IOD offers “tailored tax and legal support, exclusive member-only events along with discounts on IoD professional development courses and events”.
The Royal Charter charged the IoD with promoting free enterprise, lobbying government and setting standards for corporate governance.
I feel that if the government lets rich people get away with crimes then they have no right to prosecute poor people for doing the same thing.
Of course the rich & powerful are entitled hypocrites and disagree with me there.
Just look at loan charge scandal. They let companies facilitating tax avoidance schemes (some with actual approval of HMRC) scot-free, while hounding the victims often into suicide (10 victims so far).
Another thing HMRC seems happy about are the IR35 changes that enabled massive tax avoidance by people setting up umbrella companies, not paying tax on workers’ behalf and using different loopholes to then disappear with the money.
Of course HMRC doesn’t bother to go after the fraudsters, but rather hound the workers who got duped.
Bet that has nothing to do with the tories being in power………
HMRC has been hit by budget and staff cuts, making it harder to go after people as the remaining staff have to deal with far more cases than they can manage. The legal system is facing similar issues, so even bringing someone to trial is hard once there is a case built against them. These cases then tend to fall through for various reasons, allowing people to walk free, even when there are grounds for prosecution. The entire system is collapsing and tax evaders are laughing about it.
At the same time that they’re dropping the cap gains and dividend allowances by 75%. Probably hoping hrmc wastes time going after people who don’t know that they’re meant to pay tax now.
13 comments
The UK tax authority has prosecuted only eight cases in the past two years for the enabling of tax evasion, despite pledging to pursue the lawyers, accountants and financial institutions that help clients carry out tax fraud.
Instead, there has been a steep drop from the 43 prosecutions brought by HM Revenue & Customs in the two years before the Covid-19 pandemic, according to a response to a Freedom of Information request submitted by the Financial Times.
“The government’s rhetoric on cracking down on tax evasion, aggressive avoidance schemes and those who promote them is essentially not being followed through by HMRC,” said Nimesh Shah, chief executive at the accounting firm Blick Rothenberg.
John Hood, tax partner at accounting firm Moore Kingston Smith, who used to work at HMRC, said its limited resources meant “there are very few barriers for individuals to set up businesses that promote aggressive structures”.
The collapse in prosecutions of tax evasion enablers comes as HMRC is under intense pressure to recoup lost tax revenue. A report by the National Audit Office, parliament’s spending watchdog, in December revealed that a sharp fall in investigations over the pandemic had cost the government as much as £9bn.
The overall tax gap in the UK — the estimated difference between tax owed and tax paid — was around £32bn in 2020-21, the latest year for which data is available.
In an interview with the Financial Times in January, Simon York, HMRC’s head of serious fraud, said the agency was intent on pursuing the financial and professional services firms that facilitate tax evasion as well as evaders themselves, noting that this required more collaboration with international counterparts.
The number of prosecutions fell over the pandemic, partly owing to court closures, while lockdown restrictions affected the agency’s ability to develop cases.
But tax professionals are concerned that a lack of enforcement by HMRC, which employs 5,000 people in its fraud investigation service, weakens the deterrent effect of the legislation designed to prevent the facilitation of tax fraud.
“The current low number of prosecutions naturally means that these matters are afforded less attention than other matters which are perceived to be greater risk,” said Nicholas Gardner, a partner at law firm Ashurst.
The FOI request also revealed that HMRC has 102 live investigations into professional enablers of fraud, down from 153 in May 2021.
In 2017, the government brought in legislation, known as corporate criminal offences, which made it a crime for corporations to fail to put in place “reasonable procedures” to prevent facilitation of tax evasion. But it has yet to make any corporate criminal offence charges and the latest figures showed just nine live investigations.
John Cullinane, director of public policy at the Chartered Institute of Taxation, said there was a “strong case” for wider use of prosecutions by HMRC. But he cautioned that there was a risk of failed prosecutions taking up time and resources, resulting ultimately in a lower tax take for the Revenue, at least in the short term.
“Our preferred approach would be a public consultation on prosecution policy, to discuss the overall approach and the trade-offs needed to achieve that,” he said.
HMRC said tackling enablers of tax fraud “remains a top priority for us”.
“We’ve always been clear that we focus criminal investigations on cases where the behaviour is particularly severe, where civil sanctions alone won’t work, and where criminal prosecution will be a strong deterrent to others.”
>HMRC said tackling enablers of tax fraud “remains a top priority for us”.
It certainly isn’t for the ~~crooks~~ policy makers currently ruling this country and their families /friends / business partners, given that they are massive offenders.
43 prosecutions in 2 years is not even low effort, it’s evidence of HMRC’s leadership being accomplices to this mess.
It would be interesting to see the profile of the companies under investigation – the only possible defence is that with limited resources their targeting fewer, but bigger, cases.
Even as I type that I realise how unlikely this is though.
No wonder there is no money for nurses and teachers.
However this is unsurprising. Zahawi was sacked as Chair of Tories for the crime of being exposed. No doubt Zahawi would still be in post if he hadn’t have been publicly rumbled. Zahawi isn’t the illness, he is just a symptom.
By tradition, the chair **or** deputy chair **or** treasurer of the Conservative Party is usually a major $$$ businessman $$$ with wealthy business owning friends, capable of giving large amounts of money.
**Lord Michael Ashcroft**
Treasurer of the UK Conservative Party. One of the largest donor of the UK Conservative.
His wealth is in offshore tax heavens.
https://www.theguardian.com/news/2017/nov/05/lord-ashcroft-offshore-trust-wealth-tory-peer-paradise-papers
**Mohamed Amersi**
One of the 10 largest donors of the UK Conservative Party.
Exposed in offshore tax heaven scandal.
https://www.bbc.com/news/uk-politics-58783460
**Ben Eliott**
Donor of the UK Conservative Party.
Controversial businessman with offshore companies
https://www.theguardian.com/news/2021/oct/05/revealed-how-tory-co-chairs-offshore-film-company-indirectly-benefited-from-121k-tax-credits
**Peter Cruddas**
Treasurer of the Conservative Party. One of the 10 largest donors of the UK Conservative Party.
Billionaire Peter Crudas bragged he had access to 10 downing street in exchange of cash.
https://www.independent.co.uk/news/uk/politics/peter-cruddas-did-offer-access-to-david-cameron-for-donations-court-of-appeal-rules-10114305.html
_________
You think these people give massive amounts of money….to be prosecuted?
I was always struck by Sir John Harvey Jones talk on the BBC about twenty years ago, he told a little story.
When the tax inspector came to your office the CEO, FD and Board representative all attended nervously and everyone braced themselves for a bill.
In his experience a usual experience was an adjustment ie you had to pay or reclassify an asset etc.
Either way you ended up being told more to pay and you paid.
Now when he is in companies the inspector doesn’t arrange a visit the company calls them in and when they do the FD, CEO and operations manger attend all negotiating with things they want tax relief on and the inspector gives them an adjustment and the company receives a check.
Can’t help thinking isn’t this were it all went wrong..
Its not really surprising when you consider that its only three years ago that the Attorney General was found to be living full time in a tax haven earning £1.4k an hour, tax free, defending drug dealers, while simultaneously charging the taxpayer for a second home in London (that he needed) despite being 4,000 miles away and getting colleagues to vote on his behalf.
And to make matters worse when it was discovered he was allowed to remain an MP and was later knighted for his ‘services’ to politics.
Another austerity outcome. 2010 – 82,880 staff, 2022 – 66201 staff.
Source ONS civil service stats.
They also shut several offices and reduced the number working on complex casework…why are they doing this? Well the Institute of Directors had this to say in 2015
> “The announcement of another HMRC restructure will be met with predictable concern that fewer people answering calls could result in lower revenue. But that simply need not be the case. The number of employees should not be seen as a proxy for HMRC’s effectiveness as a tax collector. The United States Internal Revenue Service serves a population five times the size of the UK, but has only 60% more staff”
The IOD offers “tailored tax and legal support, exclusive member-only events along with discounts on IoD professional development courses and events”.
The Royal Charter charged the IoD with promoting free enterprise, lobbying government and setting standards for corporate governance.
I feel that if the government lets rich people get away with crimes then they have no right to prosecute poor people for doing the same thing.
Of course the rich & powerful are entitled hypocrites and disagree with me there.
Just look at loan charge scandal. They let companies facilitating tax avoidance schemes (some with actual approval of HMRC) scot-free, while hounding the victims often into suicide (10 victims so far).
Another thing HMRC seems happy about are the IR35 changes that enabled massive tax avoidance by people setting up umbrella companies, not paying tax on workers’ behalf and using different loopholes to then disappear with the money.
Of course HMRC doesn’t bother to go after the fraudsters, but rather hound the workers who got duped.
Bet that has nothing to do with the tories being in power………
HMRC has been hit by budget and staff cuts, making it harder to go after people as the remaining staff have to deal with far more cases than they can manage. The legal system is facing similar issues, so even bringing someone to trial is hard once there is a case built against them. These cases then tend to fall through for various reasons, allowing people to walk free, even when there are grounds for prosecution. The entire system is collapsing and tax evaders are laughing about it.
At the same time that they’re dropping the cap gains and dividend allowances by 75%. Probably hoping hrmc wastes time going after people who don’t know that they’re meant to pay tax now.