Tax evasion referrals jump 24% for individual taxpayers

Tax evasion referrals jump 24% for individual taxpayers

According to Pinsent Masons, HMRC could investigate 27 ‘serious’ tax evasion claims against some of the UK’s biggest businesses

The past decade has seen increasingly intense pressure placed on businesses and individuals alike as HMRC continues to crack down on tax evasion.

Measures such as the Criminal Finances Act 2017 have ensured that bigger businesses are held criminally liable if they fail to monitor their employees. Nonetheless, tax evasion continues to be a prominent issue in the UK and Europe, particularly amongst individuals and smaller businesses.

Law firm Pinsent Masons has found that while “serious” referrals against wealthy individuals and mid-sized businesses stabilised for the financial years 2016-17 and 2017-18, with just 460 cases, in the last year alone, there have been 3,204 referrals.

Jason Collins, partner at Pinsent Masons, stated: “With increased global information sharing among tax authorities, HMRC has access to even more taxpayer data to crack down on any suspected tax evasion.”

Furthermore, the law firm said that HMRC has disclosed that it is considering investigations into 27 “serious” evasion claims against big UK businesses. According to Pinsent Masons, a large number of cases involve the financial and professional services sectors in the UK and Europe’s larger companies.

Collins said: “These are very high figures of suspected tax evasion amongst the biggest companies in the UK. However, HMRC suspecting serious tax evasion has taken place is not the same as it having occurred.

“Whilst a number of major financial services and tobacco companies have been accused by tax authorities of directly enabling tax evasion, over the last decade the number of these cases has been falling.

“Many businesses are still in the process of rolling out new procedures to comply with the Criminal Finances Act and, in doing so, irregularities could be uncovered. They will need to ensure they have robust prevention procedures in place, particularly with regards to their supply chains.”

The increase in referrals involving individual taxpayers and smaller businesses is an area that HMRC will be attempting to further regulate with the likes of Common Reporting Standard (CRS). This will allow HMRC to have access to more information about UK residents with offshore bank accounts involving foreign tax authorities.

Last September, the first CRS information exchange took place. This month, CRS countries such as Singapore and Hong Kong will share data with HMRC.

Pinsent Masons has predicted that, through CRS, the number of “big-ticket” cases against high net worth individuals will increase even further.

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