HMRC eyes businessmen in jail for evasion push

A fall in the average length of custodial sentences for tax evasion just as the number of jailed evaders is rising suggests the taxman is moving to put lower level offenders behind bars.

In fact, figures indicate that HM Revenue & Customs is “increasingly seeking prosecution in more marginal cases,” involving hundreds or thousands of pounds, not the tens of thousands.

It means HMRC is no longer just focusing “on the very wealthiest” evaders but is instead pursuing middle-of-the-road businessmen, added Pinsent Masons, which obtained the figures.

They show that the average custodial sentence length for criminal tax evasion has fallen by around 60% over the last four years, from 41.3 months in 2011, to 17.7 months in 2014. 

Meanwhile, but over the same period, the total number of tax evaders given a custodial sentence has risen by around 30%; from 171 in 2011 to 220 in 2014. 

The subtext is that, in light of a wider range of evasion cases, HMRC is seeking maximum punishment, so an offence which may previously have incurred a fine, now results in jail.

“HMRC is… now looking more closely at moderately successful professionals and businesspeople,” warned Fiona Fernie, head of tax investigations at Pinsent Masons.

“It is clamping down on tax evaders from all walks of life and adopting a much more aggressive stance when it comes to pushing for criminal sanctions.”

Fernie expects the wider evasion net that the Revenue has cast to keep widening, and to keep the number of custodial sentences for evasion on the up, “even further.”

Politicians and the public demanding ‘zero tolerance’ on evaders to help raise £5bn will fuel the likely rise, as will HMRC’s desire to make examples of evaders by jailing them.

Individuals who have been offered settlement terms – under a COP9 investigation or via the Contractual Disclosure Facility, but who refused will be among the hardest hit, Fernie warned.

Editor's Note: Related Reading -

New offence for offshore evasion criticised

IT company bosses jailed for £500,000 tax evasion

IT consultant guilty of tax evasion

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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