HMRC profiling evaders in drive against tax fraud

HMRC profiling tax evaders

20th October 2017

HM Revenue & Customs (HMRC) is using new methods in its clampdown on tax evasion by getting under the skin of evaders. According to reports, the authority has commissioned research into the characteristics and behaviours of wrong-doers, focusing primarily on small and medium sized businesses. HMRC will apparently be using this information in its future strategy against fraudulent behaviour.

HMRC research reveals four profiles

Following interviews with 45 SMEs that have deliberately been involved in tax evasion, the research revealed that there are four key types of evaders in small to medium sized businesses:

  • Unthinking: where evasion is habitual and done without thought
  • Invested: those who see it as a necessity in order to stay in business
  • Lifestyle: where fraud enables them to have a lifestyle above their means which they feel is justified by their actual tax payments
  • Systematic: where those involved feel evasion is integral to their business model.

Evaders beware

The key takeaway from this news is the fact that the research revealed that HMRC should increase the perceived likelihood of catching these SME evaders and successfully taking action against fraudulent behaviours in order to eliminate evasion. This means that we will certainly see an increase in investigations and prosecutions of SMEs in the near future.

Given that a large proportion of the recruitment industry is made up of small and medium sized businesses, this focus is going to put huge numbers of firms under increasing scrutiny from tax authorities. For those that fit one of the above profiles, expect to feel the full force of the law as HMRC looks to make exceptions of wrong-doers.

Recruitment firms be warned

That’s not to say, of course, that those firms that aren’t actively investing in evasive behaviour can completely relax. The world of compliance is complex and with legislation such as the Criminal Finances Act 2017 opening firms up to potential risk at the hands of third parties, any firm can face prosecution. Unbeknown to you, your business could be associated with individuals or companies involved in fraudulent behaviour that you are liable for if the correct policies aren’t in place.

So why not avoid sleepless nights and potential criminal prosecutions by speaking to our team of experts today?


Live chat with one of our expert staff

Learn more about the latest tax and compliance news on our blog

Like our LinkedIn page

Follow us on Twitter

Get in touch on Facebook


Contact Us