Recommendation 11

We asked whether such significant reductions in prosecutions risks weakening the deterrent effect of HMRC’s work, which could lead to greater levels of non-compliance. HMRC told us that while it wants to see serious tax crimes addressed in the most effective way, it is not seriously concerned that the reduction might weaken the deterrent effect. It argued that the publicity around high-profile convictions, as well as its use of other enforcement tools such as civil powers, is sufficient to maintain a credible deterrent.17 However, it does not have a way to monitor this. This Committee has previously recommended that HMRC should measure the deterrent effect of its work, but it concluded 9 Q 46; C&AG’s Report, para 9 10 C&AG’s Report, para 19 11 Q 46 12 Q 80; C&AG’s Report, para 1.10 13 Qq 44, 80; C&AG’s Report, para 19 14 Q 47; C&AG’s Report, para 16 15 Qq 48–52 16 Qq 53–54; C&AG’s Report, para 16 17 Qq 47, 55 10 Managing tax compliance following the pandemic that it could not do so.18 There may be scope for HMRC to make more use of the expertise of academics, for example using its Datalab which provides trusted researchers with secure access to anonymised data.19 Compliance yield