Research by the law firm, Pinsent Masons reveals a sinister trend. Apparently HMRC carried out 28% more raids during 2015 than the year before, and 53% more than five years ago. In 2015 they raided and searched 761 properties, up from 593 in 2014 and just under 500 five years ago. The cause? Extra pressure from politicians and the public have been blamed for the crack down, tasked with preventing tax evasion.
We don’t like tax evaders – but it must be horrible being raided
It’s a funny one. On one hand none of us want to see businesses and individuals of any size getting away without paying their taxes. On the other hand an HMRC raid must be a terrifying experience, like something out of a dystopian movie, especially when they have the legal right to search people as well as places. Plenty of people feel very uneasy about the powers HMRC enjoys, even though they have to get a search warrant granted by a judge or magistrate before raiding a premises.
Necessary and proportionate?
HMRC prosecutions have increased year-on-year since 2010, in line with the trend, and they prosecuted 1135 individuals in 2015 alone, proving that the revenue doesn’t take kindly to those who try to fiddle their tax. They reckon the action they take is always ‘necessary and proportionate’, and they’re keen to carry on the good work, ramping up the number of raids during criminal investigations.
HMRC is under pressure to achieve more successful prosecutions for tax evasion, and it looks like it’s taking full advantage of the extra powers it has been granted to get the job done. Because criminal prosecutions for tax evasion are so tricky to get to the courts, raiding properties is seen as a vital way to get firm evidence. And sometimes the only way to uncover well-hidden fraud is to examine people’s personal documents.
As Paul Noble, tax director at Pinsent Masons said, “As the distinction between aggressive tax avoidance and tax evasion becomes increasingly blurred in HMRC’s eyes, it’s likely to rely increasingly heavily on evidence gathered from premises searches.”
HMRC engages with ‘shock and awe’ tactics
HMRC is obviously engaged in ‘shock and awe’ behaviour, making a clear show of strength designed to deter tax evaders and avoiders. And things are due to get a whole lot scarier for fraudsters as the revenue gets set to share even more information with ‘multiple jurisdictions’ and be better able to get search warrants granted. There’s more fun and games on the horizon, with HMRC looking forward to adopting new powers around the new corporate offence of enabling tax evasion, which means financial and tax advisors could also end up being raided. As you can imagine, at the same time there are calls for them to apply their new powers ‘fairly and correctly.’
Avoid HMRC raids – Get your tax and VAT right first time
It looks like more businesses and individuals than ever will face this ‘very intrusive and disruptive’ process in future. And it’s well worth avoiding. You don’t want to mistakenly fall foul of an HMRC raid. It’s our job to make sure your VAT matters are treated with the utmost care and tick every HMRC box. Tf you want to stay safe from raids, get in touch.