Yields on HMRC criminal tax fraud cases are up more than 1000% from last year finds latest Pinsent Masons research
HMRC brought in £991 million from its most serious criminal tax fraud investigations in the year to April 5 2024 – up from just £89 million the year before, says multinational law firm Pinsent Masons*.
Ian Robotham, Legal Director at Pinsent Masons, says these probes – known as Code of Practice 9 (COP9) investigations – represent a ‘last chance saloon’ for people who have committed tax fraud. They allow taxpayers to come forward, admit to fraud and pay all their outstanding tax, penalties and interest. In exchange, the taxpayer can avoid a criminal investigation and a potential prison sentence.
However, HMRC can still commence a criminal investigation if it is given false or misleading information by the taxpayer during interviews with HMRC or during the broader investigation.
Says Ian Robotham: “HMRC’s income from serious criminal investigations has increased sharply in the past 12 months.”
“The new Government has set itself ambitious targets for taking in extra revenue from tackling tax avoidance and evasion so we should more of these investigations in the future.”
“Taxpayers must take COP9 investigations very seriously. Complying with these HMRC investigations can significantly reduce the punishment – but the taxpayer must give an accurate, open and honest disclosure of the tax they haven’t paid.”
The largest single yield from a COP9 investigation last year was the case against Bernie Ecclestone, which yielded £653 million. However, even excluding this case, HMRC’s income from COP9 investigations hit £338 million in 2023/4 – a nearly 400% increase on the previous year.
Yields from the most serious non-criminal investigations by HMRC also increased, up in 2023/4 to £83.2 million from £72.4 million – a 15% rise. These ‘COP8’ investigations focus on those suspected of artificially lowering their tax bills through use of tax avoidance schemes. Co-operating with these investigations allows taxpayers to avoid the most serious civil financial penalties.
In both COP8 and COP9 investigations, the scale of penalties levied by HMRC depends on whether the taxpayer took reasonable care. If the taxpayer is found to have deliberately concealed irregularities from HMRC, the penalty range imposed will be much higher. Penalties have also increased as a proportion of the COP 9 yield in the last year, up from 17% to 36%. Again, the Ecclestone case has contributed to this, where he was charged 200% penalties for offshore failings, but even without that figure, there has still been an increase in penalties charged.
* Source: HMRC
