Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Develop a plan to increase prosecutions and disqualifications for tax evaders and rogue directors.
Conclusion
HMRC and the Insolvency Service are not tackling tax evaders or rogue directors sufficiently, particularly for phoenixism. The number of prosecutions resulting from HMRC’s criminal investigations reduced from 749 in 2018–19 to 344 in 2023–24. The previous Public Accounts Committee has raised concerns about fewer prosecutions meaning there is less of a deterrent effect for those inclined to evade tax. We are encouraged that 6 HMRC says it wants to increase the number of prosecutions resulting from its work, and that it has increased the number of positive charging decisions it has recommended to the Crown Prosecution Service. However, we are concerned that HMRC has not issued any penalties under powers to tackle suppliers of sales suppression software it gained in 2022. The Insolvency Service disqualified just 7 directors for phoenixism between 2018–19 and 2023–24. In total it has disqualified 6,274 directors in that time. Both figures are far too low given estimates of the number of fraudulent company registrations (5% to 20% of all company registrations) and the estimated cost to the Exchequer of contrived insolvency (£500 million a year). The Insolvency Service says it has disqualified directors who carried out phoenixism for more severe offences, and it has doubled the average length of disqualification to 10 years. It says it wants to go further both in volume and increasing publicity, particularly around phoenixism, but has not committed to any targets or forecasts. recommendation HMRC and the Insolvency Service should write to the Committee within six months with a plan to bear down on tax evaders and rogue directors who flout insolvency rules. This plan should include details of: a. how both organisations will increase prosecutions and disqualifications; b. how they will better publicise cases of successful prosecutions and disqualifications; and c. how they will report on their performance and ensure they are measuring the deterrent effect of their responsiv
Government Response Summary
The government agrees and confirms that HMRC, Companies House, and the Insolvency Service have agreed a joint implementation plan to tackle rogue directors and phoenixism, including developing a shared definition and specific measures to close vulnerabilities and increase investigations. The government will write to the Committee within six months with further details.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Companies House and Insolvency Service to increase their collaboration to tackle rogue directors and phoenixism. This includes developing a shared definition of phoenixism. The Exchequer Secretary to the Treasury, provided an update on progress in a speech on 11 March 2025. Exchequer Secretary to the Treasury: 20 years of HMRC - reflections and looking ahead - GOV.UK. HMRC, Companies House and Insolvency Service have agreed a joint implementation plan for measures to tackle rogue directors who abuse the insolvency regime to evade tax by closing down vulnerabilities in company registrations and dissolutions; increasing the compliance impact achieved by HMRC; and increasing the flow of investigations into unfit directors by the Insolvency Service. HMRC will continue to develop its estimate of tax losses due to phoenixism and the measures of the deterrent effect of the response. The government will write to the Committee within 6 months to set out its plan. Treasury Minutes Archive1 Treasury Minutes are the government’s response to reports from the Committee of Public Accounts. Treasury Minutes are Command Papers laid in Parliament. Session 2024-25 Committee Recommendations: 72 Recommendations agreed: 67 (93%) Recommendations disagreed: 5 Publication Date PAC Reports Ref Number April 2025 Government response to PAC reports 1-4, 6-9 CP 1306 Session 2023-24 Committee Recommendations: 271 Recommendations agreed: 252 (93%) Recommendations disagreed: 19 Publication Date PAC Reports Ref Number February 2024 Government response to PAC reports 1-6 [80 Session 22-23] CP 1029 March 2024 Government response to PAC reports 7-11 CP 1057 April 2024 Government response to PAC reports 12-18 CP 1070 May 2024 Government response to PAC reports 19-24 CP 1085 September 2024 Government response to PAC reports 26-29, 31, 33-38 CP 1151 October 2024 Government response to PAC reports 25, 26, 30 and 32 CP 1174 Session 2022-23 Committee Recommendations: 551 Recommendations agreed: 489 (89%) Recommendations disagreed: 62 Publication Date PAC Reports Ref Number July 2022 Government response to PAC reports 1, 3 & 10 CP 722 August 2022 Government response to PAC reports 2, 4-8 CP 708 September 2022 Government response to PAC reports 9, 13-16 CP 745 November 2022 Government response to PAC reports 11, 12, 17 CP 755 December 2022 Government response to PAC reports 18-22 CP 774 January 2023 Government response to PAC reports 23-26 CP 781 February 2023 Government response to PAC reports 27-31 CP 802 March 2023 Government response to PAC reports 32-36 CP 828 May 2023 Government response to PAC reports 37-41 CP 845 June 2023 Government response to PAC reports 42-47 CP 847 July 2023 Government response to PAC reports 48-54 CP 902 August 2023 Government response to PAC reports 55-60 CP 921 September 2023 Government response to PAC reports 62-67 CP 941 November 2023 Government response to PAC reports 68-71 CP 968 1 List of Treasury Minutes responses for Sessions 2010-15 are annexed in the government’s response to PAC Report 52 Publication Date PAC Reports Ref Number January 2024 Government response to PAC reports 72-79 CP 1000 February 2024 Government response to PAC reports 80 [1-6 Session 23-24] CP 1029 Session 2021-22 Committee Recommendations: 362 Recommendations agreed: 333 (92%) Recommendations disagreed: 29 Publication Date PAC Reports Ref Number August 2021 Government response to PAC reports 1-6 CP 510 September 2021 Government response to PAC reports 8-11 CP 520 November 2021 Government response to PAC reports 7,13-16 (and TM2 BBC) CP 550 December 2021 Government response to PAC reports 12, 17-21 CP 583 January 2022 Government response to PAC reports 22-26 CP 603 February 2022 Government response to PAC reports 27-31 CP 631 April 2022 Government response to PAC reports 32-35 CP 649 April 2022 Government response to PAC reports 36-42 CP 667 July 2022 Government response to PAC reports 49-52 CP 722 Session 2019-21 Committee Recommendations: 233 Recommendations agreed: 208 (89%) Recommendations disagreed: 25 Publication Date PAC Reports Ref Number July 2020 Government responses to PAC reports 1-6 CP 270 September 2020 Government responses to PAC reports 7-13 CP 291 November 2020 Government responses to PAC reports 14-17 and 19 CP 316 January 2021 Government responses to PAC reports 18, 20-24 CP 363 February 2021 Government responses to PAC reports 25-29 CP 376 February 2021 Government responses to PAC reports 30-34 CP 389 March 2021 Government responses to PAC reports 35-39 CP 409 April 2021 Government responses to PAC reports 40- 44 CP 420 May 2021 Government responses to PAC reports 45-51 CP 434 June 2021 Government responses to PAC reports 52-56 CP 456 Session 2019 Committee Recommendations: 11 Recommendations agreed: 11 (100%) Recommendations disagreed: 0 Ref Publication Date PAC Reports Number January 2020 Government response to PAC report [112-119] 1 and 2 CP 210 Session 2017-19