When do hmrc prosecute




















Criminal Tax Investigations. Serious Crime. Sexual Offences. Murder and Manslaughter. Cyber Crime. Human Trafficking and Slavery. Private Prosecutions. Skip to content London Manchester Emergency What are the possible penalties for tax evasion in the UK? The penalties for tax evasion can be financial, criminal and in some instances both. How penalties are determined HMRC will investigate reasoning for the under payment of tax and the amount due.

This will result in your tax underpayment case being placed in one of four categories. These are: Mistake or misinterpretation If you have made a genuine mistake which has resulted in an underpayment of tax, HMRC will treat it as an honest mistake.

There is unlikely to be any penalty imposed as long as the underpaid tax is paid. Failure to take reasonable care If a taxpayer fails to take due care when filing a tax return, such as failure to fill in a supplementary form, the HMRC regards it as a failure to take reasonable care. The HMRC regards this as a moderate offence and could result in a penalty of 30 per cent of the tax owed. Deliberate understatement If HMRC concludes tax liability was deliberately understated, it is regarded as serious tax fraud.

This could apply if the taxpayer deliberately overstated the level of their expenses or allowances. Because this is treated as tax fraud, it could result in a tax evasion penalty of up to 70 per cent of the tax owed.

Punishment for not declaring income The most severe tax evasion UK penalties that can be charged are for deliberately misleading HMRC when completing a tax return and then taking steps to hide, or attempt to hide, the fraud. It might apply if relevant documents have been destroyed or money has been moved to offshore bank accounts. This type of fraud can result in penalties up to per cent of the tax due.

For further information on the issues raised in this blog, please contact a member of our Criminal Litigation team in confidence.

David Sleight is a Partner in the Criminal Litigation team who regularly acts for individuals and companies in high profile cases. He specialises in defending tax evasion and fraud allegations brought by HMRC and has developed a specialist expertise in advising in cross border tax litigation involving Mutual Legal Assistance requests between Member States.

When an individual or company is faced with a criminal or regulatory investigation we manage every step of the process. Our criminal lawyers are astute, supportive and highly sophisticated, particularly known for providing strategic, sensible and practical advice.

We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page. All rights reserved. From this point, your case will probably follow a similar course to an enquiry under self assessment. For more information on this, see sections 10 and 11 in our Tax Return guide.

This means that HMRC can prosecute, but will normally only do so in cases which involve fraud or false accounting.

HM Revenue and Customs does prosecute people for failing to declare their income, but there are relatively few prosecutions every year. However, if you are prosecuted you could face a prison sentence. So if there is any suggestion from HM Revenue and Customs that it might take criminal proceedings, you should seek legal advice immediately. In almost every case HM Revenue and Customs will be seeking a financial settlement, which will be the end of the matter although you may expect the tax office to take a closer interest in your tax affairs in future years.

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