British personal tax regulations are horribly complex. At the same time HMRC is taking an increasingly aggressive stance to evasion. As a result more people are finding themselves under criminal investigation.

Reuters have reported an increase in prosecutions of almost a third year on year, and HMRC anticipates a massive 46% increase next time.

Taking tax evasion more seriously

It’s obvious the authorities are taking evasion more seriously since the 2007 global financial crisis, and the theory is there’s political capital to be gained by being stricter. The tax authorities have been given bigger budgets as well as enhanced powers of public aggression. All of which puts HMRC under increasing pressure to take cases to criminal court.

HMRC’s extra manpower and resources

The 2010 Spending Review gave HMRC the money they needed to expand its criminal investigation wing, adding as many as 250 extra officers and investigators. The worry is that they’ll abuse their new powers and resources to meet prosecution targets and justify the extra expense.

The Code of Practice procedure illustrate this. In early July HMRC changed its Contractual Disclosure Facility, removing the ‘denial’ option for people suspected of tax fraud. The remaining choice I stark: you can either admit fraud and agree to make full disclosure or refuse and invite legal action.

What if you make a simple mistake? You’re in hot water…

If HMRC’s suspicions are based on a misunderstanding or a mistake, which is extremely common, the denial route offered a fair basis for negotiation. Now, refusal to participate in a CDF makes criminal investigation more or less inevitable. What reason can there be other than to increase prosecutions?

Get your tax and VAT right first time to avoid prosecution

It looks like we could be sleepwalking into a situation where our basic rights are being seriously compromised. Which makes it more important than ever to get your tax and VAT right first time, every time. If you find the system the least bit baffling, it’s probably wise to get professional help.