HMRC prosecution targets in doubt

HMRC is struggling to achieve its tax evasion prosecution targets, despite recruiting additional volume crime investigators and intelligence officers.

The prosecution targets are outlined on page 28 of a new HM Inspector of Constabulary (HMIC) report, HMRC disclosure compliance with criminal investigations, published yesterday.

The targets and achieved amounts so far are...

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Comments

Quite appalling

The Black Knight | | Permalink

Quite appalling when you consider they have an overflowing pond full of fish.

It would be good to see some details of these cases as they seem to be secret and thus are not working as a deterrent to future offenders or an encouragement for past offenders to put their house in order.

Heads should roll?

Most of HMRC is really not bothered though, they still get paid regardless.

Prosecution stats    2 thanks

guyabbeytax | | Permalink

I can provide the prosecution statistics covering the period between April - September 2012. The statistics were provided by HMRC in response to a Freedom of Information request. The breakdown is as follows: 

Regime Number of Individuals
Alcohol 12
Direct Tax 24
Money Laundering 3
Oils 2
Other 3
Stamp Duty 1
Tobacco 76
VAT 65
VAT securities 16
Total 202

                                                                                                                                                                                

@guyabbeytax, Q: R any "IR35" cases included in your statistics?

dstickl | | Permalink

guyabbeytax wrote:

I can provide the prosecution statistics covering the period between April - September 2012. The statistics were provided by HMRC in response to a Freedom of Information request. The breakdown is as follows: 

Regime Number of Individuals
...   
Direct Tax 24
...   
Other 3
...   
Total 202                                                                                                                                                            

QUESTION: Are any "IR35" cases included in the above prosecution statistics please and, if yes, how many and under which "regime(s)", please?

Further analysis

guyabbeytax | | Permalink

I did try to get a further breakdown of the direct cases via a follow up Freedom of Information request, but the response from HMRC was 'HMRC is unable under FOIA to provide a further breakdown since this may lead to the identification of individual taxpayers which would be contrary to our statutory duty of confidentiality as laid down in the Commissioners for Revenue and Customs Act 2005 (CRCA)'.

@guyabbeytax Ta but Y is a public IR35 prosecution confidential?    1 thanks

dstickl | | Permalink

guyabbeytax wrote:

I did try to get a further breakdown of the direct cases via a follow up Freedom of Information request, but the response from HMRC was 'HMRC is unable under FOIA to provide a further breakdown since this may lead to the identification of individual taxpayers which would be contrary to our statutory duty of confidentiality as laid down in the Commissioners for Revenue and Customs Act 2005 (CRCA)'.

 @guyabbeytax: Thank you, but I do not understand why and how any tax [and presumably public] prosecution can be asserted to be confidential !  

In particular, in what way is a public "IR35" prosecution confidential ? 

SUM UP Q: Have you considered challenging the validity of HMRC's apparent assertion of "inability" please?

Good point!

guyabbeytax | | Permalink

You are echoing my thoughts. I was taken aback by the reply because HMRC happily publicises prosecutions on its website and via press releases. It also publishes the details of deliberate defaulters and is keen to be seen to be sending out an 'enforcement' message as a deterrent to tax evasion. I fail to see how supplying a breakdown of the direct tax prosecutions would be 'contrary to our statutory duty of confidentiality'. After all, a prosecution is a matter of public record anyway. In response to your sum up question, the answer is no, mainly because there is no substantive business reason for us to pursue the matter any further.

davidwinch's picture

Some thoughts    1 thanks

davidwinch | | Permalink

The figures quoted in the report apparently are numbers of individuals charged as a result of HMRC investigations.

It should not be overlooked that there may be a long period of time between a person being charged and their being tried and (perhaps) convicted in court.  Generally matters become public at the trial / conviction stage.

Also an investigation may be ongoing for a considerable time before a person is charged.

And finally don't forget that many people are charged with tax offences but not as a result of an investigation by HMRC (instead perhaps as part of a wider investigation by, say, the police or SOCA).  Presumably the numbers reported do not include these cases.

The former Revenue & Customs Prosecutions Office is now part of the Crown Prosecution Service and so it is not always clear whether a prosecution has come about as a result of an investigation by HMRC or by other law enforcement bodies.

Looking at the figures I do wonder just how many of these prosecutions relate to the importation of alcohol and tobacco without payment of duty at the point of entry.  Most accountants perhaps would not regard those as 'tax' prosecutions at all.

Interesting to see that direct tax prosecutions (which I take to refer to taxes on incomes, profits and gains) are a relatively small proportion.

By the way, the report from which these figures are taken is one dealing with the somewhat technical issue of the Crown's duty to disclose to the defendant all the information it has which may undermine the prosecution case or assist the defendant.  Failure of the Crown to make appropriate disclosure can result in the prosecution being stopped and the defendant acquitted (however strong the prosecution evidence may appear in other respects).  Hence the concern that tax evaders may be 'getting away with it' as a result of technical failures by HMRC.

The report notes that, "It is evident that challenges from defence teams focus on technical disclosure issues as opposed to the strength of evidence."

In law there is, of course, no corresponding duty on the defence to disclose information which it has which might assist the prosecution!

David

Yes, the old Customs & Excise ...    1 thanks

mikewhit | | Permalink

davidwinch: "relate to the importation of alcohol and tobacco without payment of duty at the point of entry.  Most accountants perhaps would not regard those as 'tax' prosecutions at all."

So they should really have had a "C&E" category ...

@guy Thanks again. Apart from time, what R the costs of pursuit?

dstickl | | Permalink

guyabbeytax wrote:

... In response to your sum up question, the answer is no, mainly because there is no substantive business reason for us to pursue the matter any further.

 @guyabbeytax:   Thanks again. Apart from your business time, what could be the financial costs of pursuit?   And what was/were the reference number(s) - if any - of your FOI request(s)?    Perhaps you could PM me, if you wish to?

REASON:   As an OAP who wishes to manage any risk of an "IR35" threat, I have sufficient time - and any necessary "excessive patience" with concomitant bureaucrat(s) - to be able to pursue this matter with my MP and/or HoC's PAC, etc. 

Time was the key factor    1 thanks

guyabbeytax | | Permalink

I will happily PM you the details of the FOI reference numbers, for you to pursue the point further with HMRC. Whilst we (Abbey Tax) handle civil investigations (COP9 cases), we do not deal with criminal investigations, so there did not seem too much point pursuing the breakdown of the direct cases more aggressively. I do know that the plumbers prosecuted for failing to take part in the Plumbers' Tax Safe Plan campaign are included, but that only accounts for 4. The second FOI response from HMRC states 'I can say that, of the 24 cases, some were sourced from campaigns, and others from general internal referrals. There were no direct taxes prosecutions in this period in support of HMRC taskforces.' I will PM the reference numbers to you now. Thank you to the other contributors to the thread too, with their practical insights and thoughts.

Clarification    1 thanks

guyabbeytax | | Permalink

In the second FOI reply, HMRC state 'You should note that in answering your original question and this supplementary, a 'prosecution' has been defined as any individual (or other entity) charged by the independent prosecutors as a result of an HMRC investigation.'

Malcolm McFarlin's picture

HMRC publication of criminal cases

Malcolm McFarlin | | Permalink

To reply to Black Nights comment;

'It would be good to see some details of these cases as they seem to be secret and thus are not working as a deterrent to future offenders or an encouragement for past offenders to put their house in order'.

It is possible to view details of HMRC criminal cases, please see the link below.  You can also subscribe to the HMRC e-mail service and receive updates of recent criminal investigations.

https://www.gov.uk/government/news/most-wanted-tax-fugitive-jailed-for-f....

As David quite rightly points out that there can be a considerable delay between the arrest of individuals and the case being heard in Court -although HMRC do publicise details of recent arrests on their website -look under the front page' what's new & announcements'.

Malcolm McFarlin

www.mandrtaxadvisers.com

johnjenkins's picture

Perhaps the reason

johnjenkins | | Permalink

for the low figures is that HMRC has now peaked and there aren't as many crooks out there as some might suggest. Look at it the other way. What happens to the extra staff once targets have been reached? So they could be prolonging their shelf life.

Who comes up with these targets? They are the people who should be bought to account.

Bloody silly final comment    1 thanks

nickja | | Permalink

@The Black Knight - Bloody silly final comment when it seems to be more or less universally acknowledged that lack of resource, ie bodies, is the fundamental issue.

tonyaustin's picture

other worries

tonyaustin | | Permalink

I am concerned that HMRC wiil now be so pressured into meeting targets that they will start prosecutions in tax cases they would normally settle with a monetary settlement instead of criminal prosecution

@tonyaustin:Surely not? R HMRC allegedly confidentiality addicts

dstickl | | Permalink

tonyaustin wrote:

I am concerned that HMRC will now be so pressured into meeting targets that they will start prosecutions in tax cases they would normally settle with a monetary settlement instead of criminal prosecution.

Surely not?

REASON: In my personal opinion, some of the "evidence" indicates that some of the HMRC might be allegedly addicted to "confidentiality" so they might perhaps take any necessary action to prevent a public "airing" in the courts, mightn't they?

Reading between the lines    1 thanks

mikefleming3028 | | Permalink

This report on any reasonable construction is highly critical in so much that HMRC have

1/ failed to ensure that senior staff had the correct training in the rules of disclosure.

2/ failed to ensure that accurate records were maintained sufficient to assist in a criminal prosecution.

3/ failed to ensure that HMRC`s mandatory case handling systems were used in all cases.

These failures could not have happened at a more sensitive time nor in a more important Department within HMRC

HMRC has demonstrated a monumental systemic failure that has probably allowed countless tax fraudsters to essentially "get away with it" based on HMRC`s failure to understand and implement their own procedures.

The report by HMIC should have gone into more depth and identified those responsible as the resultant loss to the Treasury ie you and me, could be measured in billions in lost Revenue. When is someone at HMRC going to be held to account for these major errors not by being promoted and transferred to head up another department but by being "let go". Is it too much to expect heads to roll or better still might we expect someone to play the "Roman Fool" and go of their own accord?

The Black Knight    1 thanks

ver1tate | | Permalink

Perfectly true. There is a huge pond out there just waiting for fish to to be caught.

Walk down almost any street in any town or city, and you will find tax evaders in most.

Some months ago I and some friends went out to a large restaurant, part of a chain. At the end of the meal I paid the bill and asked for a receipt so that we could divvy up. The cashier reached under the till, pulled out a receipt, looked at it, said that is the wrong amount, scored it out and wrote the amount I had paid over it. When I asked hi for a detailed receipt, I was informed it was not their custom.

I would assume from this this that not many of their sales are entered and they keep some receipts under the till in case they are asked for one.

My doubts were reported to HMRC who have done nothing.

sally1964's picture

Black Knight - 2    1 thanks

sally1964 | | Permalink

We could all give examples of this - but how many of use report them, I have but obviously never know if action is taken.

I know of HMRC officers who ask trades people for a discount if they pay in cash - seen it done with my clients who then declare the amount received and adjust vat accordingly - we have reported the officers in question but as they are still employed by HMRC so assume nothing was done.

Surely just common sense would pick up many tax evaders - checking all shop keepers have registered for tax, market traders - are they all registered - do they all have PAYE schemes - sorry to be picking on the small traders but those who operate under the line tend to be the start of a long chain.

All self builds - how many are for people in the trade who loose some costs via their businesses.

However HM need to employ the right people - and they need to act on the information provided to them - however recently had an enquiry into a little old lady as HM had been given incorrect information by local council on housing benefit. Luckily after scaring the old lady half to death we had a meeting which sorted everything out - we did spend quite some time sorting it out though.

We also need to educate people - start by writing to all teachers reminding them that if they provide private tuition they must declare it etc.

Avon ladies who have other jobs etc.still need to declare their profits.

 

 

 

 

johnjenkins's picture

I watched    1 thanks

johnjenkins | | Permalink

border control the other night. Illegals working, getting caught, out on bail, working again, getting caught again. As they were already on bail told to go. Just because they don't have a passport.

Priceless.

BKD's picture

.

BKD | | Permalink

ver1tate wrote:

My doubts were reported to HMRC who have done nothing.

How do you know?

Same

The Black Knight | | Permalink

sally1964 wrote:

I know of HMRC officers who ask trades people for a discount if they pay in cash - seen it done with my clients who then declare the amount received and adjust vat accordingly - we have reported the officers in question but as they are still employed by HMRC so assume nothing was done.

Same here, one client turned down/lost the job after saying "you must be joking you're an inspector of taxes"

What hope is there if the policemen do not see anything wrong in it.

It does seem that tax is largely a voluntary payment and that resources are wasted spending hours on fruitless and trivial private proportion add backs whilst turning a blind eye to hundreds of thousands of pounds of quite blatant tax evasion.

HMRC do not have a lack of resources...they just use them in the wrong direction (deliberately? as no one could be that stupid surely)

A clampdown on evasion would pay for itself.

You can only draw the conclusion that they do not want to do anything about evasion? Because they don't see it as wrong because they themselves are corrupt?

find one alive then

The Black Knight | | Permalink

nickja wrote:

@The Black Knight - Bloody silly final comment when it seems to be more or less universally acknowledged that lack of resource, ie bodies, is the fundamental issue.

Try to find a HMRC official that's alive or interested then.

Get some more resources would be my answer! It's not really an excuse for failure is it?

and there's plenty of resources to chase ridiculous arguments, three enquiries on one client to loose three technical points and to gain not a penny more in tax.

plenty of resources for RTI etc etc was PAYE really broken....plenty of resources for agent wrongdoing laws were there not enough rules they didn't use anyway.

plenty of resources for money laundering report collection but none for using the information. (bit like paying insurance for a car you haven't got?)

HMRC are in a large part responsible for the terrible mess this country is in. If you accept half of the problem is you do not have enough revenue and the other half of the problem is you spend / waste to much.

Unfortunately I am on the front line and see the huge amounts of tax going walkies on a daily basis because of a lack of enforcement.