New HMRC tax fraud team recovered almost £5.2bn last year

The £5.17bn collected by the Fraud Investigation Service (FIS) in the year to 31 March 2017 included £2.36bn recovered from civil investigations and £1.07bn from criminal investigations, as well as investigations into unpaid or underpaid excise duty.

Tax investigations expert Paul Noble of Pinsent Masons, the law firm behind Out-Law.com, said that it was a "major priority" for HMRC to be seen to be cracking down on tax fraud.

"Pooling intelligence and know-how across HMRC has sometimes been hard to do," he said. "But centralising a number of independent specialist teams has made that information-sharing more likely to happen."

"The OECD estimates that tax avoidance and evasion costs the global economy over $200bn a year. It is a major issue and the FIS is dedicated to tackling it – working, where necessary, with international authorities to do so," he said.

The FIS was set up in July 2015 following an internal restructuring at HMRC, prompted by criticism by politicians of the department's track record in commencing criminal prosecutions for tax evasion. It deals with some of HMRC's most serious investigations. The FIS consists of specialist tax and criminal justice experts, including specialists investigating the evasion of alcohol and tobacco duty.

A secondary role of the FIS has been to "send out a very clear message that tax fraud will not be tolerated", through media coverage of the criminal cases it has worked on, according to Noble.

While the figures reflect the fact that HMRC will use its more cost effective civil investigation procedures in most tax fraud cases, HMRC undertook 1,135 prosecutions in 2016/17. This reflects its policy to pursue criminal prosecution in cases that warrant it, either because the behaviour is typically bad or because prosecution would send out a strong deterrent message.

Over the course of the year, FIS participated in several high profile criminal investigations. Notable successes included the arrest, in June, of six alleged fraudsters from Wolverhampton, Stourbridge, Birmingham, London and Surrey for their involvement in an alleged £440 million alcohol tax fraud and money laundering racket; the sentencing, in September, of two men who ran a Truro-based financial exchange firm, Omnis Capital FX, as a front for a £40m money laundering operation and the sentencing, also in September, of a London car dealer who fraudulently claimed back £2m worth of tax on car sales between 2009 and 2011.

The FIS is also playing an increasingly important role in tackling international tax fraud. In March 2017, it was reported that it had started an investigation into an unnamed 'global financial institution' on the grounds of suspected tax fraud, in partnership with authorities in the Netherlands, Australia, Germany and France.

"This serves as a warning of the consequences fraudsters will face," Noble said. "That deterrence factor is really important when you are dealing with what can sometimes be very organised gangs of tax fraudsters and more unorganised, but equally serious, circumstances."