HMRC increasingly reluctant to show mercy with plea bargains for tax evaders

Kyle Caldwell
11 December 2019

The fall in agreements raises concerns that HMRC is becoming increasingly reluctant to let tax evaders come in from the cold and settle their affairs.

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HMRC is entering into fewer agreements that give taxpayers immunity from prosecution for tax evasion in exchange for paying back tax and penalties, data from the international law firm Pinsent Masons shows.

The number of agreements entered into by HMRC under the ‘Contractual Disclosure Facility’ fell 10% in the last tax year (2018/19), down from 486 in the 2017/18 tax year, and 20% lower than in 2016/17.

Pinsent Masons says the fall in agreements raises concerns that HMRC is becoming increasingly reluctant to let tax evaders come in from the cold and settle their affairs.

Steven Porter, partner at Pinsent Masons, says: “HMRC has a growing stack of individuals that it is confident it can prosecute. That means it is less enthusiastic, or even willing to offer plea bargain agreements.”

He adds: “Its new investigatory powers and the reams of data that HMRC gets from private banks, from lettings agents, from the Land Registry, from accountants, means it is not short of leads.

“Plea bargain agreements have become increasingly popular with taxpayers in recent years. In the past, only those with very large tax exposures used these agreements, but now those who owe much smaller sums are applying for them.”

Pinsent Masons adds that the growing volume of data held by HMRC on taxpayers’ offshore savings and investments has reduced its need to enter into plea bargain agreements.

It further adds that the data HMRC now has on overseas savings and investments enables it more easily to build a case against taxpayers and prosecute them.

If HMRC enters into an agreement under the Contractual Disclosure Facility, it agrees not to criminally investigate a taxpayer with a view to prosecuting them, on the proviso the taxpayer follows certain parameters. This involves admitting to evading tax and providing details as to how much is owed.

Taxpayers can apply to HMRC to be considered for this treatment.

This article first appeared on our sister website Money Observer

Comments

I agree!

Yeah why not. Go after the big boys for once. The Gestapo... sorry HMRC persecuted, me for 6 months (thankfully I had an FSB turncoat on my side) but it was hell. I had no rights I was just hammered by them. I know nothing of the laws I just paid what my accountant said. Nevertheless they still came after me! I'm an easy target - self-employed sole trader. It was HELL. Two months later I developed cancer. Coincidence?...

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