Tax fraud prosecutions double as HMRC gets tough

The aggressive approach taken by the HMRC to tax evasion and tax fraud over the past couple of years has seemingly paid off, as prosecutions relating to tax fraud are up by 53% compared to the financial year ending in March 2011.

There were 240 tax fraud prosecutions in the 2011/12 tax year, including cases of direct tax fraud, VAT fraud, and VAT missing trader intra-community (MITC) fraud. There was also an increase in the number of criminal investigations opened by the HMRC, with a 44% increase in tax fraud arrests compared to the 2009/10 tax year. The HMRC has used an increase budget to make more use of the criminal court options available to it, such as arrests, prosecutions and property searches. Previously, the large majority of cases would all have been handled through a civil court such as a Tax Tribunal, which would result in taxpayers being ordered to pay the outstanding tax with penalties. The new tougher HMRC stance means more people are facing criminal sanctions as a result of tax irregularities.

While the civil procedures are perhaps more cost effective in terms of increasing the amount of tax paid, the use of the criminal procedures is sending out a clear message from the HMRC to individuals and businesses alike - detection of tax compliance errors is increasing, and the HMRC will go to the courts to deal with anyone who is not complying with their tax obligations.

If you live in Northern Ireland and require advice in respect of income tax, capital gains tax, inheritance tax, corporation tax, or any other tax matter, contact Wilson Nesbitt in Belfast by calling 0800 840 9288.