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Figures show major increases in prosecutions and distraint
HMRC have significantly ramped up their efforts to add extra revenue to the public purse through clampdowns over the same period on tax fraud and overdue VAT bills, figures show.
The number of people against whom the department launched fraud prosecutions jumped to 240 in 2011/12 from 157 the year before, according to research by Pinsent Masons, an international law company, which cited the 53% increase as evidence of the taxman’s recent aggressive approach and increased compliance activity.
The firm’s head of tax, Jason Collins, claimed the Revenue recently became “much more willing to opt for the criminal – as opposed to civil – investigative weapons in its arsenal. Arrests, prosecutions and property searches have all leapt since 2010.”
But criminal proceedings should be balanced by their civil equivalent, said Collins. He urged HMRC to spend some of their funding on improving methods for bringing in missing taxes.
“We’d like to see more emphasis on civil procedures or improving the amnesties that are available to resolve avoidance or evasion issues,” he added.
The period that saw a leap in anti-fraud action also witnessed the a near-doubling of the use of distraint to settle VAT bills in 2011/12, with the taxman taking the assets of nearly 5,000 businesses, according to official data.
HMRC summarily seized movable property from 4,746 firms over the tax year, an increase of 98% on the 2,401 in the previous 12 months. The numbers suggest that that widespread use of distraint to recover unpaid VAT is a relatively new development, with only 263 instances relating to the indirect tax in 2008/9.
Philip White, CEO of independent financial adviser Syscap, which obtained the figures through a freedom of information request, claimed the taxman is being “more and more aggressive” in claiming overdue VAT payments from small and medium-sized enterprises.
