HMRC launches fewer dawn raids
10 Feb 2020
HMRC raided 1,082 homes and businesses last year as part of criminal investigations into tax evasion, but the numbers of unannounced visits are falling as the tax authority has access to more targeted information
10 Feb 2020
Analysis by Pinsent Masons carried out in 2017 showed a 34% hike in dawn raids over the previous five years, up from 499 in 2011-12 to 996 in 2016-17.
However, the law firm’s latest data shows that these may have peaked - while HMRC carried out 1,482 property raids in 2017-18, the total for 2018-19 has dropped to 1,082.
Pinsent Masons points out that HMRC has gained unprecedented access to data on taxpayers in recent years, which have allowed it to target its raids more effectively.
HMRC now receives annual data from over 100 tax authorities worldwide through the common reporting standard, and can use production orders and a range of other powers to compel documents from accountants and banks.
Andrew Sackey, partner at Pinsent Masons and former head of HMRC’s offshore, corporate and wealthy enforcement division, said: ‘These days, if HMRC has taken the decision that it is necessary to raid a property, they are likely to already be armed with an abundance of data from multiple sources that will allow them to narrow the target of their search.
‘Although the warrant will describe the specific material being sought, investigators have police powers to seize evidence of other forms of criminality they encounter when lawfully on the premises.’
‘Escaping the tax authority’s net is harder than it has ever been and the Fraud Investigation Service is already making repeated use of the new corporate criminal offence which criminalises companies for failing to prevent their staff from facilitating others to commit a tax fraud, even if the companies were entirely unaware of it.’
While the majority of dawn raids target suspected tax evaders directly (both individuals and companies), there is an increasing trend to target the enablers of fraud - the advisors or others who may have facilitated (either deliberately or through having weak governance procedures in place) the fraud of the suspected tax evader.
Accountants, money service bureaux and even members of the legal profession are in scope, Pinsent Masons said.
Pinsent Masons added that dawn raids are frequently used as a final step in cases where HMRC already has reasonable grounds to believe that the suspect has been involved in serious or complex tax crime.
An HMRC spokesperson said: ‘HMRC is committed to ensuring all companies and individuals pay the right tax at the right time and will pursue those who fail to do so.
‘We use a range of civil and criminal powers to tackle those committing serious fraud, which can lead to prosecution and imprisonment, life-changing penalties, seizure of assets, and sanctions.
‘We take all necessary steps to recover money owed and since 2010, our criminal investigations have prevented the loss of £15.9bn, and resulted in more than 5,400 individuals being criminally convicted.’