Serious Tax Evasion Declines

It seems that despite the media and political narrative that tax evasion is rife, the number of cases of serious tax evasion (evasion in excess of £50K, or evasion that is worthy of prosecution) are at their lowest level in five years.

Those are the findings of a report commissioned by Pinsent Masons.

Between 1 April 2012 and 31 March 2013, local HMRC offices referred 2,888 suspected 'serious' cases to the central Evasion Referral Team, according to the figures. This was a substantial drop on the 3,456 cases identified the previous year, and the 4,506 cases identified in tax year 2010/11.
Phil Berwick, a partner at Pinsent Masons said:

"This decline in suspected tax evasion doesn't tally with the rhetoric from some quarters that the British economy is being undermined by a chronic under-collection of tax revenues.

HMRC has plenty of tools at its disposal to catch tax evaders which serves as a huge deterrent to those considering tax evasion.

International co-operation has been stepped up significantly as HMRC has striven to curb tax evasion.

Tax evaders are now realising that HMRC has a much greater ability to tackle evasion, even if individuals conceal their assets abroad.

Five years ago some individuals and businesses perhaps felt that evading tax was relatively easy. Now they can see that HMRC is much more proactive and better informed than in the past, increasingly they are deciding that tax evasion just isn't worth the risk."

Meanwhile the tax evasion hotline is booming.


Tax does have to be taxing.

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The Tax Evasion Hotline

I see that the state has managed to turn us into a nation of sneaks, as economia reports that calls to HMRC’s tax evasion hotline reached 72,000 tip-offs last year (as per figures from Bloomsbury Professional).

Martin Casimir, managing director of Bloomsbury Professional, said:

“The sheer volume of calls to the hotline is astounding. People are clearly keen to ensure that no-one cheats the tax system and that everybody pay their fair share of tax."

However, quantity does not always equal quality; as Mr Caimir went on to say:

“HMRC is already on a stretched budget.

There’s a question mark over whether HMRC has the manpower to deal with all the complaints that it receives.”

Additionally questions need to be raised over whether these calls actually identify genuine tax evasion, or are merely being used by people who are either confused about the difference between evasion and avoidance or who simply have a petty grudge against someone.

The National Audit Office has said that the tax evasion hotline is the least cost-effective method of detecting tax evaders, as it yields just twice the amount of money it costs to operate it.

Martin Casimir noted:

“HMRC should be concerned about how few calls actually reveal a tax evasion case of note. Whilst people are now more sensitive to the possibilities of any tax irregularities, it can lead to people being over-keen and making calls that are misguided.

It’s a rarity that calls to HMRC reveal a large-scale evasion of tax. Many of the calls relate to tradesmen being asked to be paid cash-in-hand, for example. The loss of tax for HMRC is rather small.”

Therefore we should ask is this the most effective use of HMRC's resources?

Calls to HMRC’s tax evasion hotline reached 72,000 tip-offs last year, according to figures from Bloomsbury Professional

The tax and accounting group has calculated that this equals roughly 300 calls a day to the service, which allows members of the public or businesses to tell HMRC about suspected cases of tax evasion.

Martin Casimir, managing director of Bloomsbury Professional, said, “The sheer volume of calls to the hotline is astounding. People are clearly keen to ensure that no-one cheats the tax system and that everybody pay their fair share of tax."
However, Caimir warned that the high levels of calls will not necessarily lead to more investigations, and more amounts of unpaid tax collected.

“HMRC is already on a stretched budget,” he said. “There’s a question mark over whether HMRC has the manpower to deal with all the complaints that it receives.”

HMRC did not disclose figures to show how many of the calls it receives lead to investigations into tax evasion.

However, spending watchdog the National Audit Office has said that the tax evasion hotline is the least cost-effective method of detecting tax evaders, warning it yields just twice the amount of money it costs to operate it.

Martin Casimir concluded, “HMRC should be concerned about how few calls actually reveal a tax evasion case of note. Whilst people are now more sensitive to the possibilities of any tax irregularities, it can lead to people being over-keen and making calls that are misguided.”

“It’s a rarity that calls to HMRC reveal a large-scale evasion of tax. Many of the calls relate to tradesmen being asked to be paid cash-in-hand, for example. The loss of tax for HMRC is rather small.”

- See more at: http://economia.icaew.com/news/june2013/tax-evasion-hotline-soars-to-72000-calls#sthash.BpBcyE4W.dpuf

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Bob The Bounty Hunter

HMRC is ever keen to up the tax take and has, for a number of years, been running a "hotline" whereby people can secretly "grass" on people they believe to be evading tax.

However, those who are not concerned about anonymity and who want to make a nice little earner out of "grassing" on others can receive reward payments from HMRC for tips that lead to successful prosecutions and the recovery of evaded tax.

Exaro News recently raised a Freedom of Information Request with HMRC, and discovered that over £1M has been paid out by HMRC in rewards to informants and "bounty hunters" over the last 3 years.

As the financial crisis rumbles on, so the bounties paid out have increased. The payout in 2011/12 was £374K compared with £309K in the previous year.

In earlier years £384K was paid in 2009-10, £281K in 2008-09, and £156K in 2007-08.

In 2008, HMRC was reported to have paid £100,000 to a former Liechtenstein banker for a list of secret offshore accounts held by Britons (ie HMRC bought stolen property).

Oddly enough HMRC does not openly promote the bounty payments, indeed some HMRC officials even deny that rewards are paid!

In the event that there are any wannabe "Bob the Bounty Hunters" out there then you want to be paid for "grassing", then do ensure that you keep a record and that you make a specific request for payment.

However, don't hold your breath, the process of recovering evaded tax can take many years and payments are at HMRC's "discretion" (ie they can welch on the deal).

Despite this the amount of tax recovered via the hotline is not staggering, between 2005 and 2009 a paltry £42M was recovered.

HMRC, for reasons best known to themselves, won't say how much has been recovered since.

Like it or not, maybe HMRC and the state can't quite turn us into a nation of informers!


Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

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TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"