500 homes and businesses raided by the tax man

Lisa Smith, BA (Hons), CeFA

Tax inspectors raided 500 homes and businesses last year as the government stepped up the fight against suspected fraud – even though the number of serious cases dropped by a quarter.

Serious cases involve HM Revenue & Customs suspecting a tax loss of £50,000 or more or that a taxpayer could face criminal prosecution.

In the 2011-12 tax year, which ended at the start of April 2012, 3,450 properties were raided – down 23% from 4,506 cases in the previous tax year and the lowest number for five years.

HMRC cites the drop in cases as down to the recent introduction of tougher penalties for offenders, according to accountants Pinsent Mason, who researched the figures.

An example is the case of plumber Mervyn Careswell, who was jailed for a year for failing to declare earnings of more than £50,000.

Prosecutions to rise 500%

“The case is a perfect example of HMRC’s current attitude to the prosecution of tax evasion cases,” said Phil Berwick, director at Pinsent Masons. “A few years ago, a £50,000 tax evasion case would almost certainly have been subject to civil rather than criminal prosecution.

“HMRC is now prepared to use its strongest anti-evasion measures in cases that would previously have been regarded as quite modest in size.”

HMRC aims to increase the number of criminal prosecutions 500% by the 2014-15 tax year.

“We are already seeing positive results from these investigations and searches,” said an HMRC spokesman. “During 2011-12, criminal investigation activities resulted in 545 individuals charged and 413 convicted, with a success rate in court of 92%.

£4 billion tax gap

“Our specialist teams focus on areas where there is the highest risk of tax evasion. These taskforce teams are expected to bring in £50 million this year and our campaigns which allow people to voluntarily sort out their tax affairs have produced more than half a billion pounds.”

HMRC reckons the tax gap due from undeclared economic activity is £4 billion a year.

Tax task forces are already scrutinising the finances of lawyers, doctors, dentists, tutors online marketplace traders. Landlords, restaurants and scrap metal firms are also among HMRC’s targets.

“HMRC has really made a show of upping its game on tax evasion in the past year,” said Berwick. “It is making a big effort to follow through on the rhetoric, and raids on property are about as dramatic a show of force that an agency like HMRC can make.”

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