HMRC’s elite fraud team, the fraud investigation service (FIS), collected £5.47bn in extra tax last year, an increase of £300m (6%) from the previous year, according to analysis by Pinsent Masons which suggests tax authorities are taking advantage of wider powers to launch civil investigations
The law firm says that yield from the FIS’ civil investigations increased by 13% last year, up to £2.66bn in 2017/18, from £2.36bn the previous year. Yield from criminal investigations stayed level at £2.81bn.
Formed in 2015, following political pressure to increase the number of successful prosecutions for criminal tax evasion in the UK and offshore, the FIS is a centralised collection of HMRC’s most experience investigation teams, designed specifically to tackle the highest-value cases of suspected tax evasion and fraud.
Pinsent Masons cites recent high-profile cases that have involved the FIS, including the arrest of two men in Glasgow, following raids on two homes, who were suspected of a £13m VAT fraud; the jailing of a tax consultant who ran a fraudulent scheme involving £6.9m in taxes deducted from workers’ wages; and raids on homes and businesses in Glasgow involving an organised crime group accused of money laundering, benefit fraud, and mortgage fraud worth up to £4.6m.
Although criminal investigations can be more high-profile and can be a useful tool of exerting public pressure on tax evaders, HMRC has been concentrating on expanding its civil powers to further its reach, Pinsent Masons says.
In July, HMRC published a consultation document proposing changes that would simplify and quicken the process by which it can access taxpayers’ information via third parties. One proposed change is the removal of HMRC’s requirement to go through a tribunal before forcing a third parties such as retailers, accountants or even social media platforms to provide information on a taxpayer.
Steven Porter, partner at Pinsent Masons, said: ‘HMRC has thrown serious weight behind its elite team of tax investigators, which now seems to be paying off given the overall increase in revenue.
‘Although we think it is pretty impressive that the amount they are collecting is still rising there are those in the Treasury who want more.
‘But to do that HMRC argues that it needs ever more sweeping powers - and the without the oversight, the checks and balances that helped ensure HMRC acted in a fair and proportionate manner.’
Report by Pat Sweet