HMRC prosecutions

I have just spotted an article in New Stateman relating to Tax fraud prosecutions.

For every tax fraudster prosecuted in the UK between 2009 and 2019, 23 benefit claimants were prosecuted, according to new figures from the think tank TaxWatch.

This is despite tax fraud costing the economy nine times more than benefits fraud: in 2018/19, tax fraud cost the Treasury an estimated £20bn, whereas benefit fraud cost just £2.2bn.

The Department for Work and Pensions (DWP) employs three and a half times more staff in compliance than HMRC does, and eight and a half times more prison sentences (immediate and suspended) were imposed for benefits crime than tax crime over the past 11 years.

While the exact prevalence of these two offences is impossible to determine, it is notable that last year the DWP referred more than twice the number of cases to prosecutors (2,000) as the total number of criminal investigations undertaken by HMRC (800).

Using data from Freedom of Information requests and analysis of Ministry of Justice prosecution stats, the think tank also found that HMRC is prosecuting 39 per cent fewer people for tax crime, of all kinds, than it was in 2015. This is despite the number of live criminal investigations into serious and complex tax crime increasing from 50 to 400 between 2015 and 2020.

These revelations follow numerous promises from successive Conservative governments to “crack down” on tax avoidance, evasion and non-compliance; Chancellor Rishi Sunak promised last March that he would recoup around £1bn a year from this method.

In March 2016, during the Conservative government under David Cameron, the Public Accounts Committee warned HMRC to “do more to tackle tax fraud and counter the belief that people are getting away with tax evasion… increase the number of investigations and prosecutions, including wealthy tax evaders, and publicise this work to deter others from evading tax and to send out a message that those who try will not get away with it”.

It accused the department of creating “the impression that the rich can get away with tax fraud”.

That same year, in February 2016, HMRC committed to 100 criminal prosecutions for “serious and complex tax crime” a year by 2020 – yet in 2019/20, it had only managed 46.

This sluggishness comes despite high-profile UK tax scandals in recent years, including the Panama Papers leak in 2016 of offshore account details, and a similar scandal the following year dubbed the Paradise Papers. Tech giants such as Amazon, Google and Facebook have faced long-running scrutin over how much tax they pay in the UK.

The cost of benefit fraud in 2018-19 amounted to just 1.2 per cent of total benefit expenditure. The loss to the Treasury due to the underpayment of tax accounts in the same period amounted to 7 per cent of tax revenue.

This contrasts starkly with an enduring tendency among the public to wildly overestimate the extent of benefit fraud: surveys show that people generally tend to believe 24-27 per cent of welfare spending is on false benefit claims.

In 2017, the British Social Attitudes survey found that the public is more sympathetic towards tax dodging than playing the benefits system – with 68 per cent saying it is wrong not to declare casual work to the benefit office to gain £500, compared to 56 per cent saying it is wrong not to declare such work to avoid paying £500 in tax.

Nevertheless, extensive research on public attitudes towards taxation by Tax Justice UK between December 2019 and June 2020 found that tax avoidance is universally hated by the public– with 81 per cent saying tax avoidance by large companies is morally wrong, and 76 per cent saying the same for individuals.

Disproportionate focus on benefit fraud by the government – which ran a publicity campaign against “benefit theft” in 2007 – coupled with a benefit “scroungers” narrative in the tabloid press and media (for example, in reality TV programmes like 2014’s Benefits Street) has placed a distorted picture of widespread welfare chicanery in the public imagination.

It is a stubborn perception, which distracts from the “massive government losses to white-collar criminality dwarfing the ‘benefit theft’ figure”, in the words of political scientist Adam Taylor.

“The current system, which ends up jailing thousands of benefits claimants whilst tax fraudsters walk free, cannot be justified if we are to have equality before the law,” said George Turner, executive director of TaxWatch.

“But the truth is that if HMRC went after tax fraudsters in the same way that the DWP go after benefits crime, the criminal justice system would collapse…

“It makes absolutely no sense to prioritise the enforcement of benefits crime over tax crime when the amount of money lost to the Treasury from tax fraud is huge compared to benefits fraud.”

HMRC has commented that since the launch of its Fraud Investigation Service in 2016, it has “launched over 76,000 civil cases and more than 4,000 criminal investigations”. Its policy is to deal with fraud as a civil matter and reserve criminal investigation for cases where it needs to “send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate”.

According to TaxWatch analysis of the latest DWP annual report, the department concluded 46,000 benefit fraud investigations and referred 2,000 cases for criminal prosecution in 2019/20.

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I doubt whether anyone will be surprised by the difference in the fraud prosecution figures.

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@Gee3 , Thanks for posting that report Gee,it doesn’t surprise me !
What does surprise me is that government doesn’t seem worried by this ?
I think that report should be posted in a prominent place in every public
in the UK for all to see, and in the parliamentary buildings as well??
Maybe the BBC should be compelled to make a weekly report on the
progress made in combatting this crime at prime time news as well ??
Donkeyman! :-1::worried::-1:

For some reason, a lot of the public seem to see benefit fraud as a crime but tax evasion as fair enough.

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@Maree , That’s true, maybe because media and government have run a campaign against benefit fraud, but have not done the same for tax fraud ??
I wonder why??
Donkeyman! .:thinking::thinking:

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The media plays a big role in this, as no media owners claim benefits, but many avoid tax. The same with MP’s, many avoid tax, or have personal, or party, financial supporters who do. And that makes a big difference.

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Going back…when the French changed to the Euro from Francs…Not just the Farmers of course but many many people went firmly into panic mode.
…all their hidden cash, where do we exchange it without showing our true wealth…Spanish had the same situation of course… :innocent:
We sold our Spanish home and were paid in Euros…had no idea that could occur. We had no taxes outstanding as the property had become exempt for owning it over the 17 years needed for that…haha just saying :innocent:

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Too many of their cronies up to no good, for sure :face_with_symbols_over_mouth:
I think it’s also because people think of trying to keep hold of money you’ve earned by fair means or foul is fair enough but helping yourself to money you’ve not earned isn’t.

That’s a false argument because helping yourself to services paid for by other people’s taxes while dodging contributing yourself is the same thing

When I was a young Bricklaying apprentice, I had to go & do some repairs to a local house that had been burgled whilst the owner was on holiday.

Someone, had got into the house, where all the internal doors had locks on them & then spent their time smashing down every door & turning every room upside down.

The firm I worked for only did the job after he paid upfront. As not only was he not good at paying his taxes, but also his bills. I knew 2 people who he had owed money to, who had a cash filled brown envelopes pop through their letter box late at night following that alleged burglary.