Source · Select Committees · Public Accounts Committee
Recommendation 22
22
Accepted
Significant decline in criminal tax prosecutions risks reducing the deterrent effect on non-compliance.
Recommendation
In 2023–24 there were 344 criminal prosecutions, compared with 691 in 2019–20, before the pandemic.64 HMRC said it is very successful in its criminal investigations and has a high conviction rate in its prosecutions, but that it tends to reserve their use for the most serious and higher- value cases 65 We asked HMRC whether failing to prosecute some criminal behaviour reduces the deterrent effect of HMRC’s criminal investigations and leads to a culture of non-compliance.66 HMRC accepted there was a risk that the deterrent effect could reduce.67 It said it was reviewing the academic research on this topic but said there was currently limited evidence about the deterrent effect of criminal investigation and prosecution, but that it could still impose significant sanctions using civil processes.68 63 Q 23 64 Report on 2023–24 Accounts, para 1.22 65 Qq 30, 39-40 66 Q 31 67 Q 31 68 Q 31 15
Government Response Summary
HMRC will increase counter-fraud capability and expand work to address fraud, publishing an updated Issue Brief articulating its ambitions and areas of likely focus, and considering the associated uplift in positive charging decisions.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2025 6.8 HMRC’s published criminal investigation policy outlines how it maximises the effectiveness of criminal investigations, including the circumstances in which HMRC will generally consider starting a criminal, rather than civil investigation. 6.9 Additional funding announced at Autumn Budget 2024 will increase HMRC’s counter- fraud capability and enable the department to expand its work to address fraud. HMRC will publish an updated Issue Brief articulating its ambitions to better address fraud, including areas of likely focus where it can increase its effectiveness through the use of its civil and criminal powers. 6.10 HMRC is currently considering the scale of the associated uplift in positive charging decisions associated with this increased investment and will publish a target in due course.