A growth in political will to tackle tax dodging appears to be being matched with stiffer punishment for offenders. Prison sentences for tax fraudsters have increased over the past few years, as the HMRC has been pressing for fraud to be taken more seriously.
The big law firm Pinsent Masons reckons sentences for tax fraud are up by 25 per cent. That’s to four years and one month, up from three years and three months 12 months ago.
Olga Tocewicz, senior associate at Pinsent Masons, says: “HMRC has come under growing political pressure in recent years to prove to the public that it has a workable strategy in place to stamp out evasion. As a result, it has become more dogged in its approach to sentencing.
“Both individuals and businesses are facing stringent additional new laws for offshore tax evasion later this year. And should anyone be caught out by these rules, they may face an even lengthier sentence.”
Investigations into the hidden economy
Meanwhile, it appears that the HMRC’s efforts to tackle the hidden economy are proving to be less successful. According to Moore Stephens, investigations into the “cash-only” world netted £173million in 2016/17, down from £182million the previous financial year.
Dominic Arnold, tax partner at the company, tells Economia: “The hidden economy is notoriously difficult to police. Added to the relatively low recovery per case, this calls into question whether investigations into the hidden economy are the best use of HMRC’s limited time and resources.
“Everyone accepts that HMRC has an obligation to police the hidden economy. But should these investigations come at the cost of not dealing with more serious and high-value tax evasion?”
The HMRC’s take on the situation is this: “Most individuals and businesses pay the tax that is due. HMRC is determined to keep up the pressure on the small minority of individuals and businesses who attempt to hide their liabilities.”