3 HMRC's approach to prosecutions |
9. We have previously reported on HMRC's response
to the list it received in April 2010 of potential tax evaders,
but it was not until February 2015 that the Committee heard the
detailed allegations of wrongdoing at HSBC's Swiss bank.
HMRC identified 3,600 potentially non-compliant UK taxpayers from
the list they were given. HMRC told us that it had traced 3,200
of these people and had established that around 1,100 had not
given HMRC full information about their affairs and owed tax.
HMRC stated that it had reached a settlement with all bar 130
individuals on the list and had recovered £135 million.
10. In December 2013 we reported that, despite assurances
received from HMRC a year earlier, it remained the case that only
one of 16 cases subject to criminal investigations arising from
the list of Swiss bank account holders had resulted in a prosecution.
In response to our further questions on this matter HMRC told
us that it submits those cases it considers to have the strongest
basis for being successful to the Crown Prosecution Service (CPS)
who have the final decision on whether to prosecute based on the
strength of the case and the public interest.
In this instance HMRC had sent three cases to the CPS who accepted
one for prosecution.
HMRC noted that this person had been successfully prosecuted because
an earlier disclosure from the individual had not included the
Swiss account. Of
the 1,100 people identified as owing tax, 500 were encouraged
by HMRC to settle under a voluntary disclosure arrangement which
means that they are normally immune from further action.
HMRC told us that under this arrangement penalties could be up
to 30% of the tax owed, but that this was limited to 10% for the
tax years before April 2009.
11. We questioned whether HMRC had the balance right
between prosecuting people to deter others, and settling cases
to bring tax in quickly.
HMRC told us that prosecutions were a key and important part of
its activities. It had accepted the need to increase the proportion
of prosecutions across the range and maintained that it had increased
prosecutions fivefold in the past three years.
However, HMRC noted that it did not believe that prosecutions
for any law enforcement agency were the single or the only deterrent,
or were a cost-effective way to do all compliance work.
HMRC also noted that the complexity involved in bringing criminal
charges was illustrated by the fact that it took HMRC on average
44 months to get to a point where the CPS considers charging.
HMRC told us that an evaluation is currently underway to help
it understand more about views and responses to prosecutions for
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Committee of Public Accounts, HMRC tax collection: annual report & accounts 2012-13, Thirty-fourth Report of Session 2013-14, HC 666, 19 December 2013, para 8 Back
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Supplementary written evidence from HM Revenue and Customs, 3 March 2015 Back