Cases of serious tax evasion cases in the UK fall to lowest level in five years

Law firm Pinsent Masons reported today that cases of serious tax evasion in the UK, as established by HM Revenue & Customs (HMRC) has dropped by 16% over the past year to the lowest level in the last five years.

According Pinsent Masons, local HMRC offices identified 2,888 suspected cases of serious tax evasion in the year ending 31 March 2013, compared to the 3,456 cases seen in the previous year.

A case of serious tax evasion is defined by HMRC as concerning the evasion of tax totalling GBP50,000 or more, or if it is suitable for prosecution.

HMRC has reportedly increased its anti-evasion measures and now has new powers and initiatives that such as the ability to impose penalties of up to 200% of the original tax owed if an individual does not declare any income or capital gains that has been hidden from HMRC in an offshore bank account.

Taskforces have also been created to help prevent cases of serious tax evasion, including the Offshore Coordination Unit (OCU) which coordinates HMRC’s analysis of the extra information on UK taxpayers that it now receives regarding money in overseas banks.

In addition, private sector experts are using state-of-the-art data analytics to improve HMRC’s strategy and use of data to identify possible tax evasion. HMRC is also expanding its resources with the recruitment of a further 2,500 tax inspectors and an increase in the amount of treaties with other countries designed to improve attempts to catch tax evaders who hold their assets in offshore accounts, including arrangements with the governments of both Liechtenstein and Switzerland

Morality demands rethink of UK-Swiss tax deal

Ministers should urgently rethink plans for a deal with Switzerland which would see UK tax evaders let off lightly while harming poor countries, says Christian Aid.

‘We fear that the agreement will be soft on the Britons who have illegally hidden billions in the Alpine tax haven but hard on developing countries, which also suffer from Swiss banking secrecy,’ said Christian Aid Director Loretta Minghella.

‘In a week when there has been a lot of talk in the UK – following the riots – of a moral deficit in society, it is extraordin­ary that the UK Government appears poised to let tax evaders off with nothing more than a regular tax bill.

‘People who have hidden money in secret Swiss bank accounts in order to evade their legal responsibi­lities to the UK will be able to escape unpunished and they won’t even have to reveal their identities to the UK taxman.’

The proposed agreement will lead to Britons with secret Swiss bank accounts starting to pay tax on them, which the Swiss will pass on to the UK – but crucially, without revealing those people’s identities.

Christian Aid believes the deal will seriously damage global efforts to curb tax dodging – a menace which it estimates costs poor countries $160 billion a year, far more than they receive in aid.

Germany is also reported to have initialed a similar deal with Switzerland.

Poor countries lack the political and economic clout to do such deals with Switzerland – but they too lose billions as a result of money being illegally hidden in tax havens.

And just like the UK, they need that money to fund vital public services such as schools, hospitals and justice systems.

Ms Minghella added: ‘I urge UK ministers to reconsider the Swiss tax deal as a matter of urgency.’

Christian Aid is calling on the UK and other G20 Governments to use their November summit meeting in Cannes to bring about an end to the tax haven secrecy exemplified by Switzerland.

Specifically, the G20 should broker a new system of automatic information exchange between Governments – including those of poor countries – to help them to detect when citizens hide wealth offshore.