HMRC ‘more lenient’ on white-collar tax avoiders

HMRC has been accused of making fewer arrests on white-collar tax dodgers due to a lack of resources and criticism about it being too “trigger happy”.

The number of arrests made by the tax authority dropped by a third to 511 in the 12 months to April, compared with 782 over the previous tax year.

The analysis, by the law firm RPC, comes as concerns increase about the level of fraudulent claims made to the UK Government’s coronavirus pandemic support schemes.

HMRC is also benefitting from agreeing out-of-court settlements with wealthy taxpayers to pay back what they owe. The amount of tax collected through so-called plea bargain agreements soared to £119.4 million in the 12 months to the end of March, compared with £95.8m over the same period the year before, according to data compiled by Pinsent Masons.

The National Audit Office (NAO) has estimated that £3 billion may have been stolen in furlough money by criminal gangs and bogus employers.

Similarly, Scottish Financial News reported earlier this month that UK taxpayers could lose as much as £26bn from fraud, organised crime or default due to the lighter checks on Coronavirus Bounce Back loans.

The NAO said there was evidence of “significant levels of furlough fraud” from organised gangs “hijacking” claims and by employers taking money intended for staff on furlough. 

HMRC has similar criminal investigation powers to other UK law enforcement agencies, including making arrests for tax offences. The tax authority had previously been criticised for too many unnecessary arrests and has been subject to wrongful arrest claims.

RPC said that the resources spent fighting such claims and the negative publicity has made HMRC less trigger happy in making arrests. This has been denied by HMRC. 

Adam Craggs, the head of tax investigations at RPC, said: “Given that the majority of tax evaders are not hardcore criminals but fairly normal businesspeople who have made wrong decisions and just got out of their depth, arrests should be treated as a last resort.”

The firm claims that lockdown has also impeded HMRC’s ability to carry out investigations because the majority of its employees are working from home, The Times reports.

HMRC said it takes its responsibilities as a law enforcement agency very seriously and will only make arrests when absolutely necessary. It said that its investigators launched more than 12,600 civil and 600 criminal investigations in the past tax year.

It said: “We’re doing all this while tackling increasingly complex investigations and ever more sophisticated opponents.”

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