HMRC has an Offshore, Corporate and Wealthy (OCW) Unit which, according to the Government’s latest figures, has convictions totalling 67 years of prison time for tax evaders last year. This is nearly triple the total of just 23 years secured a year earlier, according to analysis from Pinsent Masons, the international law firm. Pinsent Masons detailed the increase in prison sentences is a sign that HMRC’s strategy of using targeted criminal investigations, rather than just civil penalties, as a powerful deterrent to address deliberate conduct including professional enabling and tax evasion by high net worth and ultra-high net worth individuals is bearing fruit. The OCW was established in the wake of the “Panama Papers” scandal in 2016 to investigate serious non-compliance by businesses and the wealthiest taxpayers. The sentencing secured in respect of the unit’s casework will reflect the fact that where you have wealthy “white collar” evaders, significant sums of money, or breaches of positions of trust are likely to be in play. HMRC is proving that wealthy tax evaders who engage in deliberate dishonesty at the expense of the tax man don’t just get fines – they go to prison. The Offshore, Corporate and Wealthy Unit is now regularly completing painstaking criminal investigations of the most complex and serious forms of tax evasion, resulting in convictions and significant prison time. While many may assume they’ll be outside of HMRCs field of vision, Pinsent Masons warned the current threshold for wealthy individuals to be investigated by HMRC’s specialist OCW unit is lower than many might expect. Pinsent Masons explained anyone with an income of over £200,000 per year falls within its terms of reference. On top of these high-profile investigations, UHY Hacker Young Group, the accountancy network, recently found that HMRC was ramping up its regular tax investigations. Recent data published by HMRC showed it opened 102,000 compliance investigations in Q1 2021, up 36% from 75,000 in the previous quarter. This was almost quadruple the low of just 27,000 in the second quarter of 2020. Additionally, the amount of extra revenue HMRC brought in from its compliance activity jumped 29% to £14.2 billion in Q1 2021, an increase from £11 billion in the same period in 2020.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This article is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of August 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.