Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Accepted
HMRC criminal prosecutions have significantly declined, weakening deterrent effect on tax fraud
Conclusion
In correspondence after our evidence session HMRC said that in 2023–24 it had launched 430 new criminal investigations and more than 10,200 civil investigations into suspected fraud, and had charged around 17,000 penalties for deliberate non–compliance.74 However, the number of prosecutions resulting from HMRC’s criminal investigations reduced from 749 in 2018–19 to 344 in 2023–24.75 In May 2023, the previous Public Accounts Committee raised concerns that fewer prosecutions could weaken the deterrent effect of HMRC’s compliance work.76 HMRC told us it wants to increase the volume of prosecutions resulting from its work.77 It said that it has increased the size of its fraud investigation service from 4,400 people in 2018–19 to 4,800 now, and wants to further increase it to 5,400 by 2029–30. HMRC told us it expects this to result in an increase in the volume of its criminal investigations and resulting prosecutions.78 HMRC also told us that it has increased the number of positive charging decisions it has recommended to the Crown Prosecution Service.79
Government Response Summary
The government agrees with the recommendation that HMRC and the Insolvency Service should create a plan to tackle tax evaders and rogue directors, and will write to the committee within six months to set out this plan with an implementation target date of Autumn 2025.
Government Response
Accepted
HM Government
Accepted
6. PAC 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: • how both organisations will increase prosecutions and disqualifications. • how they will better publicise cases of successful prosecutions and disqualifications; • how they will report on their performance and ensure they are measuring the deterrent effect of their responsive work. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2025 6.2 The government announced at Autumn Budget 2024 the commitment of HMRC, 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. 6.3 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. 6.4 HMRC will continue to develop its estimate of tax losses due to phoenixism and the measures of the deterrent effect of the response. 6.5 The government will write to the Committee within 6 months to set out its plan.