What recruitment firms need to know about the increase to tax evasion prison sentences

'recruitment prison sentence tax evasion

29th October 2019

In the UK, the push towards tougher tax systems is moving faster than ever. In recent blogs, we have written about the numerous steps that HMRC has taken to crack down on evasion – with the exchequer introducing a number of innovative measures to help claw back lost revenue.

Recently, this approach has been paying dividends, with recent figures demonstrating the average person sentence for tax evasion has increased by 10%. Any firms that place contractors abroad should be aware of this, as many of these punishments have been given to companies that operate overseas. Here’s what recruitment agencies should know.

What should recruitment agencies know: Record prison sentences for tax evasion

According to figures from law firm Pinsent Masons, the average prison sentence length for tax evasion has increased by 10%. Average sentences were up two months from 2017/18, and now last around two years and seven months. This is based off of research into the 1,010 individuals that were charged with offences relating to tax evasion this year.

The exchequer has been pushing for longer custodial sentences to deter people who are considering tax evasion for a while now, with a parliamentary report published in 2016 criticising the tax authority for not having a tough enough approach when dealing with evaders. Currently, the maximum penalty for income tax evasion in the UK is a seven-year prison sentence or an unlimited fine.

HMRC is using its full range of powers to claw back the money that it is owed, making an example of tax evaders by pushing for longer sentencing lengths is a part of its method to deter future tax cheats. For example, tax evasion convictions may result in a longer sentence if HMRC can persuade the judge that the accused had:

  • Played a leading role in coordinating the offence for their own personal gain;
  • Abused a position of power by pressuring colleagues or friends into complying with their plan to evade tax;
  • Planned tax fraud in a sophisticated manner rather than a “spur of the moment type offence”;
  • Deliberately concealed information when being investigated; or
  • Evaded tax or carried out other forms of fraud for a protracted period of time.

One of many steps

However, recruitment agencies should be aware that growing length of prison sentences is simply a by-product of the steps that HMRC has taken to prevent tax evasion, especially overseas. In fact, according to data obtained under the Freedom of Information Act, the tax authority brought in £560 million from investigations into Britons’ offshore assets and income last year – a record. This was the first time that it has managed to exceed half a billion pounds in revenues, and a stark increase of 72% over the past two years, rising from £325 million in 2016/17.

With divisions such as the new Offshore, Corporate and Wealthy unit, created to target high-net-worth individuals and businesses with undeclared offshore interests, the authority is targeting as many overseas entities as possible.  In 2017/18, the unit made investigations into 827 individuals or businesses, representing an average yield of £677,000 per taxpayer.

Recruitment agencies need to be aware

Clearly, tax authorities are trying to collect as much revenue as possible, domestically and internationally. Recruitment agencies placing contractors abroad should be aware that the record HMRC prison sentences for tax evasion are an indication that the whole compliance landscape is stricter than ever.

Unfortunately, with laws such as the Criminal Finances Act 2017, agencies are liable to be prosecuted for mistakes from anyone associated with them, even contractors. Therefore, any small oversight when it comes to compliance could land your company in hot water.

Despite this, increased strictness shouldn’t dissuade you from thriving in international markets. With an expert contractor management consultancy, you can rest easy that compliance is taken care of, letting you focus on your own expertise.

Contact our team of experts today to find out how we can help your firm:


Follow our LinkedIn page

Follow us on Twitter

Get in touch on Facebook

Contact Us