Recommendation 14

HMRC’s approach to civil litigation contrasts with its approach to criminal prosecutions. HMRC said it is increasingly selective about when it uses its criminal investigation powers and when it seeks prosecution.48 HMRC’s criminal investigations resulted in 240 prosecutions in 2022–23. This is a significant reduction on the 691 prosecutions achieved in 2019–20.49 To pursue deliberate errors, it is now more likely to use its civil powers and penalties, including new powers to freeze accounts or get people disqualified as directors. It said it will only resort to criminal investigation and prosecution 38 Qq 1–3 39 Qq 10, 11 40 Q 4; Letter to the Public Accounts Committee from HMRC, dated 11 January 2024 41 Q 11 42 Q 10 43 Qq 4,10 44 Letter to the Public Accounts Committee from HMRC, dated 11 January 2024 45 Q 1 46 Qq 8,13 47 Q 9 48 Q 33 49 C&AG’s Report, para 1.30 HMRC performance in 2022–23 13 when the crimes are serious or when it needs to use criminal powers to get at the evidence. HMRC told us the reduction in criminal prosecutions is also partly due to backlogs in the criminal justice system.50 Research and development tax reliefs