Not worth the bother: HMRC wins majority of tax avoidance cases

HMRC wins majority of tax evasion cases

1st September 2017

All of you will, hopefully, be aware of the new legislation that is set to impact the UK in the coming months. Firstly, there’s the Criminal Finances Act which comes into power next month and following that, there’s the introduction of GDPR in May 2018. These present major challenges for organisations across a wide range of sectors, notably recruitment. However, while the market is set to become more problematic following their introduction, it’s already difficult enough for companies that have broken the law as, according to new figures published last week, HMRC wins the majority of tax avoidance and evasion cases it takes part in.

HMRC wins tax avoidance cases

Of the 26 cases where HMRC looked into tax evasion in 2016/17, 22 were won by the tax authority, one was a mixed case and just three were lost, figures relatively in line with previous years, suggesting that it presents a consistent and robust opponent for firms that have fallen foul of the law.

According to Heather Self, partner at law firm Pinsent Masons, “Anyone seeking to implement a complex tax avoidance scheme would have to be a confirmed optimist to assume they would win if the case is ultimately litigated.”

However, many take a significant amount of time to get to court, with all of last year’s cases related to facts dating from 2003-2009 and the majority taking at least 10 years before they even get in front of a judge. “It takes a long time for the ‘tail’ to die out,” she explained.

These successes have contributed to a record year for HMRC. According to its figures, it generated a yield of £28.9bn as a result of its anti-tax avoidance and evasion campaigns, which is the equivalent of around a quarter of the annual NHS budget.

A formidable opponent

Some have suggested that the relatively low number of cases implies that the political promises to ‘stamp out avoidance and evasion’ are nothing more than just that. However, these figures are likely to increase dramatically when we review them in the coming years such is the massive influx of new regulation that’s set to impact the UK.

It also shows HMRC to be a formidable opponent and one that organisations should not even attempt to tangle with. On average it wins nearly 90% of the cases it takes on, with the majority leaving firms facing huge fines. While the likes of Amazon, Google and Starbucks can, rightly or wrongly, deal with these challenges, what chance does the average recruitment consultancy really stand? If you want to avoid prosecution and a potential fine or even a prison sentence, then partner with a specialist before it’s too late.


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