Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Assess HMRC's use of powers, penalties, and prosecutions to tackle wealthy individuals' tax non-compliance.
Conclusion
Too many compliance investigations last too long, with too few leading to penalties and prosecutions. HMRC has different actions it can take against taxpayers who it identifies are at risk of not paying the right tax, including penalties, civil investigations into taxpayers suspected of fraud, and criminal investigations. The average time it took for HMRC to close an investigation increased every year over the period 2018–19 to 2022–23 and, for investigations yielding more than £100,000, the average duration in 2023–24 was 40 months. But in 2023–24, there were only 25 criminal prosecutions of wealthy individuals, and 456 penalties, down from 1,747 penalties in 2022–23. HMRC’s current ambitions to increase prosecutions and penalties are underwhelming, given that its ambition for a 20% increase in the number of people charged with tax fraud would only mean another five cases annually for the wealthy population. It is particularly disappointing that HMRC has issued no penalties to enablers of tax evasion, despite acknowledging unscrupulous advisers often play a key role in helping the wealthy evade tax. We are also unconvinced that HMRC fully utilises the deterrent effect of publicising successful prosecutions, despite it acknowledging the value of publicising high value, high-profile cases. recommendation a. HMRC should assess whether it is using its powers to tackle non-compliance by the wealthy sufficiently, in particular, whether it makes sufficient use of available sanctions. b. HMRC should investigate and report back to the Committee on why it has not been able to issue any penalties to enablers of tax evasion, and how it plans to start using them as an effective sanction and deterrent. As part of this, HMRC should consider setting an annual target for the number of penalties it issues. c. HMRC should also show more ambition for the number of prosecutions of wealthy individuals evading tax, given its current plan is to increase the number charged each year by onl
Government Response Summary
The government has announced an ambition to increase positive charging decisions for harmful fraud by 20% to 600 per year by 2029-30, expecting a corresponding increase in criminal investigations of wealthy individuals. HMRC has already significantly increased investigations of wealthy individuals and clarifies that prosecution decisions rest with independent authorities.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation Recommendation implemented At Spring Statement 2025, the government announced its ambition to increase the number of positive charging decisions (PCDs) for the most harmful fraud by 20%, from 500 to 600 per year by 2029-30. HMRC has not set specific targets for PCDs in different customer groups, but as part of these plans it is expected that the number of wealthy individuals under criminal investigation will increase, with a corresponding increase in PCDs. Investigation activity will also include fraud facilitated by those in large corporations, and by individuals and companies who make it possible for others to hide money offshore, in addition to tackling other key threats. The reference in the Committee’s report to increasing the number of individuals charged each year by five was based on previous prosecution volumes rather than positive charging decision figures. HMRC has already significantly increased the number of wealthy individuals under criminal investigation from around 50 in 2016-17, to 275 at the end of 2024-25. Due to the length of time it takes for criminal investigations to reach trial, an increase in PCDs during this spending review period will likely lead to an increase in prosecutions in later years. HMRC is not a prosecuting authority; decisions about prosecutions sit with the independent prosecuting authorities.