UK Trends and Developments Contributed by: Bambos Tsiattalou, Richard Cannon and Amjid Jabbar, Stokoe Partnership Solicitors
“to increase the number of tax fraudsters charged by 20%.” Under the heading “Prosecute more tax fraudsters”, the full text of the Spring Statement provides context and background to this broad ambition: “HMRC is expanding its counter fraud capability to increase the number of annual charging decisions for the most harmful fraud by 20%, compared to current levels, from 500 to 600 per year by 2029–30. Addi - tional criminal investigations will focus on delivering a strong deterrent. This will include tackling those who undermine legitimate trade and small business, fraud committed by the wealthy, fraud facilitated by those in large corporations, and by individuals and compa - nies who make it possible for others to hide money offshore. Investigations will also address organised criminal attacks, focusing on illicit finance and com - plex money-laundering schemes.” HMRC has responsibility for conducting criminal investigations in order to gather the necessary evi - dence; this is then passed to the relevant prosecuting authority which makes the decision on whether a case should proceed for prosecution. Meeting the higher charging decisions target outlined in the Spring State - ment will inevitably increase the number of HMRC criminal investigations. Most cases are investigated on a civil basis by HMRC, typically leading to fines and penalties. Invariably, because of cost, resources and the higher burden of proof applied compared to civil investigations, criminal investigations only apply in the most serious cases.
To combat tax evasion and fraud, Rachel Reeves announced the recruitment of an additional 5,000 compliance officers last year. To date, around 500 have been recruited. In practice, HMRC reviews eve - ry case of suspected tax evasion or fraud to assess their suitability for criminal investigation. Given the government’s target, it is inevitable that more cases will become criminal investigations. Equally, more civil investigations (Code of Practice 9) are likely to become criminal investigations, particularly if there is inadequate co-operation or disclosure. The Spring Statement also announced that a new HMRC reward scheme for informant whistle-blowers will be launched “targeting serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes”. The scheme will be modelled on successful US and Canadian whistle-blower schemes, which reward informants with a sum linked to a per - centage of any tax taken as a result of their actions. Closing the “tax gap” remains a key government pri - ority. Taxpayers can therefore expect an increasingly active HMRC that focuses on ramping up compli - ance activity and, where appropriate, launching more investigations, both civil and criminal. Over time, the expansion of its counter-fraud capability will increase the number of decisions to prosecute.
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