Guest post from London solicitors. For specialist criminal defence legal advice contact Lewis Nedas Law’s tax defence lawyers – visit their website here: http://lewisnedas.co.uk
Tackling tax evasion is one of the three big items on the UK’s agenda as it takes on the Presidency of the G8. In a speech to the World Economic Forum in Davos last month, Prime Minister David Cameron pledged “to use the G8 to drive a more serious debate on tax evasion and avoidance.”
The announcement followed hard on the heels of a speech by Keir Starmer, the Director of Public Prosecutions (DPP), in which he promised to continue cracking down on the practice.
Tax evasion v tax avoidance
Instances of both tax evasion and tax avoidance have been in the press recently. Starbucks and Amazon, for example, felt the wrath of the British media when it was revealed that they were, quite legitimately, paying minimal tax in the UK, despite earning massive profits.
This is tax avoidance, described by HMRC as using the tax law to get a tax advantage that Parliament never intended. It is legal, but often involves contrived artificial transactions that serve little or no purpose other than to produce a tax advantage.
Tax evasion, on the other hand, involves fraud or deliberate concealment, and is a criminal offence. Numerous cases have hit the headlines recently, and HMRC has added to growing awareness of the issue by publishing pictures of thirty of the most prolific offenders on Flickr.
The Prime Minister’s pledge
According to Prime Minister David Cameron, tax evasion and tax avoidance is an issue whose time has come. Speaking at the World Economic Forum in Davos last month, he warned that governments need to act together to tackle the problem.
“This is about me and all the other G8 leaders being able to look our people in the eye and say that when they work hard and pay their fair share of taxes, we will make sure that others do as well,” he said.
HMRC actions
Back home, there are clear signs of a focused approach to tax evasion.
HMRC recently launched a national publicity campaign to increase awareness about tax evasion and the actions that the Revenue is taking to detect it.
These include plans to increase specialist staff levels by 2,500 by 2014-15; improve the detection of high-risk cases through the use of new technology; make more use of offshore agreements with other tax authorities; and continue using specialist regional taskforces to deal with high-risk sectors.
The approach of the DPP
On the criminal justice side, DPP Keir Starmer set out his approach to tax evasion in a recent speech, highlighting the boost given to the fight against tax evasion by the creation of the Central Fraud Division within the Crown Prosecution Service (CPS).
Looking ahead, he predicted that extra funding will result in an increase in the number of cases that are referred to the CPS by HMRC. He expects up to 1165 non-organised tax fraud cases to be referred in 2014-15 – up from 565 cases in 2012-13. In addition there will be a significant number of cases relating to organised criminal gangs.
Starmer also highlighted a recent first – the successful prosecution of a case relating to the creation and operation of a dishonest tax avoidance scheme, and the subsequent imposition of a significant custodial sentence – as a sign of the growing effectiveness of the fight against tax evasion.
“No scheme is too clever or complex to be detected, to be put before a jury and to be found to be illegal,” he warned.
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