18/07/22

UK: HMRC fails to prosecute any company under tax evasion powers.

As published on scottishlegal.com, Monday 18 July, 2022.

Not a single company has been prosecuted by HMRC under corporate tax evasion powers introduced five years ago.

An offence for companies failing to stop those associated with the business from enabling tax evasion came into force in September 2017 under the Criminal Finances Act.

HMRC has said that the number of investigations would change “as part of the normal criminal investigation process” and that “not every opportunity will lead to an investigation and not every investigation will lead to a charge”.

Adam Craggs, head of RPC’s tax, regulatory and financial disputes team, which looked at the HMRC figures, said it was “not about simply increasing the number of corporate prosecutions, but encouraging organisations to do more to prevent tax evasion happening in the first place”.

He added, however, that it was surprising there had not been a single prosecution, “given that the aim of the legislation is to make it easier to prosecute companies if their associated persons facilitate tax evasion”.

HMRC has faced pressure over the paucity of tax evasion prosecutions for many years. The House of Commons’ Public Accounts Committee said in a 2015 report that prosecutions for offshore evasion were “still woefully inadequate”.

A spokeswoman for HMRC said: “Corporate criminal offences were introduced to encourage organisations to put preventative measures in place to reduce tax evasion.

“The success of the new offences can already be seen in a corporate culture shift towards anti-tax evasion awareness and procedures.”