25% rise in average sentence for tax fraud

10 Apr 2018

The average length of tax fraud sentences has increased significantly, as HMRC and the Crown Prosecution Service pushes for tax fraud cases to be considered in more serious categories of offence.

According to a report by law firm Pincent Mason, the average length custodial sentences for tax fraud has increased 25 per cent to just over 4 years in the past year, up from 3 years 3 months the previous year.

The average sentence length for tax fraud, which includes offences such as tax evasion, VAT, excise duty and customs duty fraud, may be driven even higher by more successful prosecutions, the report says, especially once the strict liability offence for offshore tax evasion comes into force in Autumn 2018. 

The offence will apply if a UK taxpayer fails to notify HMRC of his or her chargeability to tax, fails to file a return or files an incorrect return in relation to offshore income, assets or activities. The maximum penalty under the new offence is six months’ imprisonment.

Olga Tocewicz, Senior Associate at Pinsent Masons, says: “HMRC is pushing hard for longer sentences as it clamps down on tax evasion.”

“Even in cases where the prosecution secures a conviction, it may still appeal if it thinks the sentence is not tough enough.

“HMRC has come under growing political pressure in recent years to prove to the public that it has a workable strategy in place to stamp out evasion. As a result, it has become more dogged in its approach to sentencing.

“Both individuals and businesses are facing stringent additional new laws for offshore tax evasion later this year, and should anyone be caught out by these rules, they may face an even lengthier sentence.”

If you are concerned about a tax enquiry into your affairs, worried that you may have possibly under-declared or, worse still, are you already under enquiry, our tax specialists, some of whom are former HMRC Inspector of Taxes, are well versed in dealing with all types of tax issues. We are also readily available to oversee HMRC disputes on your behalf, as well as to represent clients in appeal proceedings before the Tax Tribunal. In certain situations, we can also offer professional fee protection insurance, so the costs are covered in whole or in part.

For more information and to discuss your tax affairs in further detail, please contact Paul Attridge or your usual Beavis Morgan Partner.