Out-Law News 1 min. read

Property raids by HMRC increase again as pressure to prosecute tax evasion rises, says expert


The number of property raids conducted by HM Revenue and Customs (HMRC) increased by a further 19% in the year to March 2015, partly as a result of pressure on the tax authority to increase prosecutions for criminal tax evasion, an expert has said.

Raids on premises carried out by HMRC have tripled over the past four years, from 196 in tax year 2010/11 to 593 in 2014/15, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com. HMRC conducted 500 raids over tax year 2013/14. The government set HMRC a target to secure 1,165 prosecutions over 2014/15, up from the 165 successful prosecutions it obtained in 2010/11.

"HMRC is being pressured to increase the number of prosecutions secured for criminal tax evasion and has now been provided with the increased means to do so," said tax expert Paul Noble of Pinsent Masons. "It is pursuing as many cases as possible in an effort to meet targets set by the government."

"Raids on premises are often an essential means of gathering evidence that is needed in cases dealt with for prosecution. It is labour-intensive work but needed in such investigations. A non-criminal tax enquiry is much more cost effective but does not always send the deterrent message HMRC wishes to convey," he said.

Property raids are used by HMRC to obtain sufficient evidence for a criminal prosecution and allow for the seizure of vital evidence. HMRC can obtain a search warrant from a magistrate or judge, which also allows its officers to search any individuals on the property and seize personal documents and electronic files. The raids are sometimes referred to as 'dawn raids' because they are often conducted early in the morning or over holiday periods to carry an element of surprise.

HMRC has been allocated more resources to tackle tax evasion and meet prosecution targets over the past few years, including an additional £900 million in funding and 320 new criminal investigations staff. It also now has stronger prosecution powers following the merger of the Revenue and Customs Prosecution Office with the main Crown Prosecution Service (CPS) in 2010.

The total number of tax evaders given a custodial sentence for criminal tax evasion has also increased over the past few years, rising by around 30% from 171 in 2011 to 220 in 2014. However, the average sentence length has fallen by around 60% over the same period, which tax expert Paul Noble said suggested that HMRC was pushing for custodial sentences in a wider range of cases.

"An increase in the number of raids conducted and custodial sentences meted out for tax evasion reflect the fact that HMRC is now casting its net wider," he said. "It is no longer focusing narrowly on HNWIs [wealthy high-net worth individuals] and those guilty of the most serious evasion. It is targeting a broad range of taxpayers and refusing to let those suspected of more minor offences slip through the cracks."

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