HMRC raises £95m through taxpayer plea bargains
12 Dec 2019
HMRC is less keen to enter into plea bargain style agreements in tax avoidance cases, because it now has more taxpayer data available even though each case generates over £200,000
12 Dec 2019
The number of agreements under the contractual disclosure facility dropped by 10% last year to 438, down from 486 in 2017-18. This number has fallen 20% since 2016-17 when it stood at 549, according to analysis by Pinsent Masons.
The analysis shows HMRC collected £95.8m in extra tax through entering into these agreements last year, up from £91.1m in 2017-18.
If HMRC enters into an agreement under the contractual disclosure facility, then it agrees to not criminally investigate a taxpayer with a view to prosecuting them subject to certain conditions. In return, a taxpayer admits to evading tax and provides details as to how much is owed.
Pinsent Masons says the fall in agreements has raised concerns that HMRC is becoming increasingly reluctant to let tax evaders settle their affairs this way, partly because the growing amount of data that HMRC has on taxpayers’ offshore savings and investments means it can more easily build a case against a taxpayer and prosecute them.
HMRC has received information on 5.7m offshore bank accounts held by UK taxpayers since the introduction of the common reporting standard and other data sharing facilities.
Steven Porter, partner at Pinsent Masons, said: ‘HMRC has a growing stack of individuals that it is confident it can prosecute. That means it less, enthusiastic, or even willing to offer plea bargain agreements.
‘Its new investigatory powers and the reams of data that HMRC gets from private banks, from lettings agents, from the Land Registry, from accountants means it is not short of leads.
‘Plea bargain agreements have become increasingly popular with taxpayers in recent years. In the past, only those with very large tax exposures used these agreements but now those who owe much smaller sums are applying for them.’