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Insight

Convictions for tax fraud up 143%

There are three figures we track that reveal the extent of HMRC's criminal investigations activity, and the extent of its success (or failure):
  1.  

  2. warrants executed by HMRC ("raids");

  3. decisions by the Crown Prosecution Service ("CPS") to charge for tax offences ("prosecutions); and

  4. convictions for tax offences in the courts ("convictions").


  5.  

 

All three are tracked because they deal with different stages in the prosecution cycle. It often takes between 12-24 months between a raid and a prosecution; and a similar period again between a prosecution and any conviction. From a combination of Parliamentary Answers and Freedom of Information Act requests, we can provide the figures for 2010/11 to 2013/14 (save the prosecutions figure for 2013/14 which has yet to be released):

 
































 
Year Raids Prosecutions Convictions
2010/11 498 420 280
2011/12 731 545 401
2012/13 793 770 522
2013/14 744 ? 682

 

There has been a dramatic increase, particularly in convictions, from 2010/11 to 2013/14: up a startling 143%. (Prosecutions were up 83% to 2012/13; and it will be interesting to see the figure for 2013/14 when it is released.) The number of raids increased markedly between 2010/11 and 2011/12, but the increase slowed and then the trend reversed, with there being fewer raids in 2013/14 than in 2012/13. It is too early to reach a definite conclusion regarding this; perhaps the obvious candidates for a raid have already been served with a warrant; or perhaps the HMRC Criminal Investigations team have reached peak capacity.

In September 2010, the Chief Secretary to the Treasury, Danny Alexander, pledged to make funding available to HMRC for a five-fold increase in criminal prosecutions for tax evasion; and in January 2013, the incumbent Director of Public Prosecutions, Kier Starmer QC, said, in respect of non-organised tax fraud, that the CPS was aiming to prosecute seven times as many people in 2014/15 as it had done in 2010/11.

It seems pretty clear that both these targets were rather over-ambitious.

But missing these targets is not in itself a bad thing. I have always been a bit uneasy with the concept of 'targets' for prosecutions. Absent a five-fold increase in staffing in HMC's criminal investigations team, a five-fold increase in number of prosecutions could be achieved by the CPS 'lowering the bar' on the chances of a conviction before proceeding to charge. That, almost certainly, would lead to lower conviction rates going forward, and the incurring of significant amounts of unnecessary costs for both accused and accusers.

Added to which criminal investigations are enormously time consuming for HMRC and I suspect, absent the unquantifiable deterrent effect, unprofitable.

 

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