Dawn raids on suspected tax evaders by HM Revenue & Customs (HMRC) have increased 34 per cent in the last five years, from 499 in 2011-2012 to 669 in 2016-2017, according to new figures from law firm Pinsent Masons.
Despite the long-term increase in dawn raids, there has been a 12 per cent decrease in raids relating to white collar tax evasion committed by wealthy individuals or businesses (from 761 in 2015 to 669 in 2016). This does not however indicate a slowing of action, but rather that HMRC is shifting towards using production orders.
The number of property raids carried out by HMRC rose 8 per cent, from 1,449 in 2015-2016 to 1,563 in 2016-2017.
Jason Collins, Head of Tax at Pinsent Masons, says: “HMRC have shown they are not afraid to come down hard on large corporates they suspect of tax evasion – obviously, the reputational impact of dawn raids can be devastating.”
The Criminal Finances Act 2017 that makes failure to prevent tax evasion a criminal offence comes into force on 30 September, and will bring with it a raft of new powers for HMRC to tackle tax evasion.
Collins comments: “The new offence means HMRC will be investigating how businesses, or their employees, might be assisting or encouraging tax non-compliance by their business partners, customers, contractors and suppliers. Therefore, there may be an increase in raids after it becomes operational this September.”
“Banks and professional services companies have a high risk of their staff or agents being involved in tax evasion, because of the large amount of capital handled by them. However, the new offence applies to all sectors, and all companies should be aware of how they may be affected.”
He advised firms to “refresh their raids and critical incident procedures and seek professional advice in order to know what to do in case HMRC officers appear without warning.”
If you are concerned about a tax enquiry into your affairs, worried that you may have possibly under-declared or, worse still, are you already under enquiry, our tax specialists, some of whom are former HMRC Inspector of Taxes, are well versed in dealing with all types of tax issues.
We are also readily available to oversee HMRC disputes on your behalf, as well as to represent clients in appeal proceedings before the Tax Tribunal. In some situations, we can also offer professional fee protection insurance, so the costs are covered in whole or in part.
For more information and to discuss your tax affairs in further detail, please contact your usual Beavis Morgan Partner.