The number of HMRC prosecutions is falling year on year, with press reports noting a significant drop of two-thirds in five years. However, for those who are prosecuted, the consequences of a conviction can be disastrous. By seeking legal advice from experienced HMRC solicitors like those at Altion Law at the earliest opportunity, you stand the very best chance of securing a lenient penalty or even avoiding an HMRC prosecution altogether.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.
What are HMRC Prosecutions?
Contrary to popular belief, HMRC prosecutions are not conducted by HMRC. HMRC is responsible for ensuring all taxpayers adhere to their tax obligations, which involves investigating those who are suspected of underpaying or avoiding tax. During the course of an investigation, HMRC collates evidence, which it subsequently passes to the Crown Prosecution Service, who decide whether to prosecute the taxpayer.
When will HMRC Prosecute Taxpayers?
As we have explained, HMRC is not responsible for deciding when to bring an HMRC prosecution. That decision lies with the CPS, who will assess whether the case is likely to succeed and, if so, whether bringing an HMRC prosecution is in the public interest. However, HMRC is responsible for submitting a case to the CPS for consideration and for gathering the evidence the Crown Prosecution Service needs to bring an HMRC prosecution.
HMRC has always favoured civil proceedings over HMRC criminal prosecutions. Recently, it has stated an intention to be even more selective when choosing which taxpayers to subject to a criminal investigation. This is because civil investigations tend to be more straightforward than criminal ones and, in most cases, uncover the information HMRC need to establish the taxpayer’s actions and ascertain the losses to the revenue. Civil proceedings are cheaper and quicker than HMRC criminal prosecutions and result in the unpaid tax and any interest and penalties being recovered sooner.
Having said that, HMRC expressly reserves the right to undertake a criminal investigation into a taxpayer’s affairs if it considers it necessary. Examples of the types of circumstances that might warrant a criminal investigation include the following:
- Cases involving criminal gangs purposefully attacking the tax system.
- Systematic frauds involving a significant loss of revenue.
- Cases involving individuals who hold positions of trust or responsibility.
- Cases in which the taxpayer made materially false statements or produced materially false documents to HMRC officers during the course of a civil investigation
- Cases where the taxpayer used false documents or misrepresented material facts to enhance the credibility of a tax avoidance scheme.
- Cases involving deliberate concealment, deception, conspiracy, or corruption.
- Cases in which the taxpayer used false or forged documents.
- Money laundering cases, particularly where those involved were professional advisors, such as solicitors or accountants.
- Case involving repeat offenders.
- Cases involving theft.
- Cases where the taxpayer has misused or unlawfully destroyed HMRC documents.
- Cases where the taxpayer has assaulted, threatened, or impersonated an HMRC official.
- Cases linked to wider criminal activities, involving those not involving tax offences.
What are the Potential Penalties in HMRC Prosecutions?
The potential penalties if an HMRC prosecution leads to a conviction depend on the offence. For example, if you are convicted of fraudulent evading VAT or submitting a false statement for VAT purposes, the maximum penalty is 14 years in custody.
The Court will consider a variety of factors when deciding the severity of the sentence. For instance, circumstances like the offender playing a central role in a group activity, abusing a position of trust, or carrying out a sophisticated fraud with significant planning may justify a longer term of imprisonment than those in which the offender was coerced into taking part in the fraud, was not motivated for personal gain, or did not understand the seriousness of their actions.
The Court will also take into account the intended gain to the offender or the intended loss to the revenue. The level of harm is divided into categories, with the highest being Category 1, covering offences worth £50 million or more, and the lowest being Category 7 covering offences worth less than £20,000.
How we can Help
Despite HMRC preferring civil proceedings to criminal ones, HMRC prosecutions can have a disastrous impact on those taxpayers who are subjected to them. Even if you are acquitted, the reputational damage and harm caused to your business can be irreparable. That’s why our specialist HMRC solicitors and barristers always strive to avoid our client’s issues being escalated to an HMRC prosecution, working tirelessly to negotiate a favourable settlement with HMRC or persuade HMRC to use their civil as opposed to their criminal powers.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.