Taxman raids to increase under new evasion law

Dawn raids carried out by the taxman have jumped 34% in the past five years, and look set to increase. The enforcement of a new corporate criminal offence from September could increase the number of raids carried out by HMRC, according to law firm Pinsent Masons.

Last year, the total number of property raids rose by 8% from 1,449 to 1,563.

But white-collar crime is being less frequently targeted through this method, with raids mostly focusing on lower level offences like benefit fraud and illegal cigarette trading.

This is in line with a falling number of dawn raids conducted on businesses by the City watchdog since the financial crisis.

Last year, there was a 12% decrease in raids relating to white collar tax evasion. Pinsent Masons said this reflected a change in approach from HMRC, who are using other legal means such as production orders to obtain evidence.

But a new offence under corporate criminal tax law, aimed at making businesses more accountable or their employees, could result in a higher number of raids.

The new offence of failure to prevent the facilitation of tax evasion will be introduced on 30 September, giving HMRC more powers to prosecute companies and partnerships.

HMRC is also under greater pressure to successfully prosecute a higher number of tax evasion cases, and has been granted extra resources to pursue more cases.

Jason Collins, head of tax at Pinsent Masons, said: “Banks and professional services companies have a high risk of their staff or agents being involved in tax evasion, because of the large amount of capital handled by them. However, the new offence applies to all sectors, and all companies should be aware of how they may be affected.”

He advised firms to “refresh their raids and critical incident procedures and seek professional advice in order to know what to do in case HMRC officers appear without warning.”


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