Figures show that 2,972 cases were flagged up by local HMRC offices in 2015/16 and passed to its dedicated Evasion Referral Team; up from 2,749 cases the previous year.
Pinsent Masons says that the increase comes as HMRC is under continued political pressure to clamp down on aggressive tax avoidance and evasion, and at a time when it has an expanding toolkit to help it do so.
The international law firm added that HMRC will be keen to be seen to step up its enforcement activity after the ‘Panama Papers’ leak revealing extensive use of secretive offshore tax havens by the rich and powerful, and recent criticism of its handling of tax evasion allegations at HSBC’s Swiss banking arm.
Seek guidance
Businesses and high net worth individuals concerned that their tax position could be viewed as abusive should seek guidance about coming forward to HMRC to open negotiations about a possible settlement, Pinsent Masons advises.
Fiona Fernie, partner at the law firm, says: “HMRC is very alive to the ongoing need to tackle serious on-shore and offshore tax evasion. Although significant progress has been made to deter offshore tax evasion in recent years, the battle is far from over.
“Headline-hitting exposés like the Panama Papers leak and the HSBC Swiss banking scandal highlight that sheltering wealth from the taxman remains an extremely highly-charged issue.
“This is exacerbated by the apparent blurring of the lines between avoidance and evasion and the fact that many individuals seem to assume that any type of tax structuring which involves offshore is automatically illegal.”
Bigger arsenal
Fernie continues: “HMRC now has more weapons in its arsenal to help it hit increasingly exacting enforcement targets. There is no question that it is prepared to use them to powerful effect to clamp down on wrongdoing and maximise the deterrent value.”
In the 2015 Summer Budget, HMRC was granted an extra £800m ($1.1bn, €1bn) to invest in compliance and tax evasion, which it is expected to use to recover £7.2bn in unpaid tax by the start of the next decade.
This increased budget is expected to see the number of criminal prosecutions into serious and complex tax crime triple, increasing the number of prosecutions to 100 per year within five years.
“Anyone who is concerned that their tax position is compromising is likely to find that the taxman looks more favourably on them if they come forward of their own volition to reach a solution,” she said.
HMRC taskforces
Data from HMRC shows that tax evasion taskforces have recovered around £540m since they were first launched five years ago.
Since 2011, the Revenue has launched more than 140 taskforces targeting sectors at the highest risk of tax fraud, netting more nearly £250m in 2015/16 alone, almost double the previous year’s yield.
Fernie adds: “HMRC is using increasingly sophisticated tools and techniques to uncover wrongdoing – from closer liaison with overseas tax authorities, to cutting edge data analytics which can flag up anomalies or trends within the information that HMRC and other government agencies hold.
“This should result in continuous improvements in HMRC’s success rate both in identifying suspected crime and prosecuting those cases successfully.”
