Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Accepted
HMRC has significantly reduced criminal prosecutions, now favouring civil powers for deliberate tax errors.
Conclusion
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
Government Response Summary
The government agrees and will provide further explanation by Summer 2024. HMRC is already working on a previous recommendation to review the deterrent effect of criminal investigations and prosecutions, collecting data for analysis to provide a refreshed view of the impact of tax crime prosecutions.
Government Response
Accepted
HM Government
Accepted
4.4 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2024 4.5 The government will provide further explanation by the target date. The Committee will be aware that HMRC is already working on a previous Committee recommendation to review the deterrent effect of criminal investigations resulting in a prosecution. The data to support this work is currently being collected for use by HMRC’s specialist analysis function and will provide the department with a refreshed view of the deterrent impact of tax crime prosecutions.