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Revenue generated from serious criminal tax investigations by HMRC surged to nearly £1 billion last year, marking an increase of over 1,000% compared to the previous year, as reported by Pinsent Masons. For the fiscal year ending in April 2024, HMRC collected £991 million from these so-called "last-chance saloon" cases, also known as Code of Practice 9 (CoP9) fraud cases, up from £89 million in the prior twelve months.
Ian Robotham, Legal Director at Pinsent Masons, explained that the CoP9 framework allows taxpayers to voluntarily disclose fraud, settle their tax liabilities, and pay any associated penalties and interest. In exchange for this cooperation, individuals can avoid criminal prosecution and potential imprisonment. However, HMRC retains the authority to pursue legal action if false or misleading information is provided during the process.
Robotham emphasized that the new government has established ambitious goals for increasing revenue through the enforcement of tax avoidance and evasion measures, indicating that more investigations are likely on the horizon. He cautioned taxpayers to take CoP9 investigations seriously, noting that full compliance can significantly mitigate penalties, provided that disclosures of unpaid taxes are accurate, transparent, and comprehensive.
A notable portion of the CoP9 revenue came from Bernie Ecclestone, the former owner of Formula One, who accounted for £653 million of the total amount. Even without Ecclestone's contribution, HMRC's CoP9 income reached £338 million in 2023/24, representing an almost 400% increase from the previous year.
Additionally, yields from the second most serious non-criminal investigations, known as CoP8, also saw an uptick. In 2023/24, these investigations generated £83.2 million, up from £72.4 million, reflecting a 15% increase. The CoP8 investigations primarily focus on various tax avoidance schemes.
The significant rise in revenue from HMRC’s tax investigations highlights the increasing scrutiny on tax compliance and the consequences of evasion. With government initiatives aimed at bolstering revenue from tax-related offenses, taxpayers may face greater pressure to ensure transparency and adherence to tax regulations in the coming years. The landscape surrounding tax compliance is evolving, as authorities intensify their efforts to address tax avoidance and fraud within the UK.
