Policy paper

2010 to 2015 government policy: tax evasion and avoidance

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/reducing-tax-evasion-and-avoidance. Current policies can be found at the GOV.UK policies list.

Issue

The vast majority of UK individuals and businesses pay the tax that is due. However, there is a small minority who don’t.

This imposes an unfair burden on the honest majority and prevents money from reaching the crucial public services that need it. We want to stop people cheating the tax system and collect more of what’s owed.

The difference between the revenues that in HM Revenue and Customs’ (HMRC) view should come in, and the total actually collected by HMRC, is known as the ‘tax gap’. Tax evasion and tax avoidance by businesses and individuals contribute to the tax gap, along with error, failure to take reasonable care, non-payment, legal interpretation, the hidden economy and criminal attacks on the tax system.

The tax gap in the 2010 to 2011 financial year was estimated to be £32 billion – 6.7% of the total tax that HMRC estimates was due – and tax evasion and avoidance together accounted for £9 billion of this.

Actions

We are working to prevent evasion and avoidance, detecting it early where it arises, and counteracting it effectively through investigation and legal challenge.

We are investing in HMRC to prevent tax avoidance and evasion. In 2010 the government allocated HMRC £917 million from efficiency savings to reinvest in generating additional compliance revenues of £7 billion a year by 2015.

In the Chancellor’s 2012 Autumn Statement, HMRC received a further £77 million for specific additional projects aimed at reducing evasion and avoidance.

At the G8 summit in June 2013 we announced steps towards achieving greater international tax transparency to prevent offshore tax avoidance and evasion.

Giving people opportunities to declare what they owe

We are running campaigns to encourage people to tell HMRC what they owe, before we track them down. So far, HMRC has raised £610 million from voluntary disclosures, and almost £395 million from a large number of follow-up activities.

Prosecuting more people who break the law

HMRC is taking swifter legal action against those who don’t come forward and sort out their taxes. We are also allocating more resources to increase the pace and number of tax evasion cases being brought before the criminal and civil courts.

We are setting up local task forces to identify and deal with tax cheats, using criminal and civil powers.

We are prosecuting more people who break the law by evading tax. We have recruited an additional 200 criminal investigators to increase the number of people prosecuted for tax evasion from 165 in 2010 to 2011, to 565 in 2012 to 2013, and to 1,165 in 2014 to 2015.

Preventing avoidance by large multinational corporations

Some multinational businesses avoid paying some taxes by shifting profits away from the location where the activities creating those profits take place - this is also known as base erosion and profit shifting (BEPS).

The international corporate tax standards have struggled to keep pace with changes in global business practices, with an increasing share of trade taking place online. International tax standards have remained largely unchanged for over a hundred years - and now need to be updated to prevent gaps from being exploited.

At the G20 meeting of finance ministers in February 2013, Chancellor of the Exchequer George Osborne welcomed the initial report by the international Organisation for Economic Co-operation and Development (OECD) on addressing BEPS as a first step for dealing with profit shifting by multinational corporations.

At the G8 summit in June 2013, G8 leaders called on the OECD to draw up a template for global corporations to report to tax authorities on where they make their profits and pay taxes around the world. This will give tax authorities around the world a new tool against tax avoidance by multinationals.

Alongside these efforts, we are also recruiting more people to speed up HMRC’s work to identify risks relating to large businesses. This will help to make sure that multinationals fully declare their UK profits and pay the tax due in the UK.

Preventing avoidance and evasion by wealthy individuals

We are expanding HMRC’s Affluent Unit, with 100 extra investigators and extra risk and intelligence staff to identify and deal with avoidance and evasion by the wealthiest individuals.

We are increasing the number of specialist personal tax inspectors to prevent evasion and avoidance of inheritance tax, using offshore trusts, bank accounts and other entities. These specialists will concentrate in particular on the agents and tax intermediaries involved in these activities.

Increasing our ability to identify offshore tax evasion and avoidance

We are working more closely with other tax administrations to prevent offshore evasion.

At the G8 Summit in June 2013, the UK reached a major new agreement with G8 member states to move to establish the automatic exchange of information between tax authorities. G8 countries agreed to work with the OECD to develop a model for this.

This builds on the prior commitment made by France, Germany, Italy, Spain and the UK to pilot the automatic exchange of tax information. This initiative has since been joined by 12 other EU Member States and Mexico and Norway.

The UK Crown Dependencies and Overseas Territories (Guernsey, the Isle of Man, Jersey , the Cayman Islands, Anguilla, Bermuda, the British Virgin Islands, Montserrat, Gibraltar and the Turks and Caicos Islands) have also joined this initiative, agreeing to automatically exchange information about accounts held in those jurisdictions with the UK and others.

We have also set up a new centre of excellence within HMRC to bring together and enhance our expertise in dealing with offshore evasion. The team will look at how HMRC can best use data to identify offshore tax evasion.

Using data and new technology

We are investing in our ability to use data and new and advanced technology to identify fraud and evasion risks. We have already brought in an extra £1.4 billion of tax revenue by investing £45 million in these activities.

We are improving HMRC’s CONNECT analytical computer system, so that the department is better able to identify areas of compliance risk. This will allow HMRC to act swiftly in identifying and investigating fraudulent behaviour.

Dealing with tax avoidance schemes

We are designing legislation that minimises the scope for tax avoidance.

The government has introduced a General Anti-Abuse Rule (GAAR), aimed at deterring and preventing artificial and abusive tax avoidance schemes.

We will also introduce new measures to deal with tax advisers who sell contrived and aggressive tax avoidance schemes. The government has announced it will consult on proposals to introduce significant new information disclosure and penalty powers, to make it more difficult for the promoters of abusive schemes to continue to market them in the future.

We are using settlement opportunities to encourage users of avoidance schemes to agree their tax position with us, and investing in additional resource to accelerate litigation for those who do not settle.

We are making better use of anti-avoidance communications to influence the behaviour of taxpayers and promoters of avoidance schemes. We are also improving the quality of information available on avoidance to help taxpayers realise the potential downsides and risks.

Background

The 2010 document ‘The Coalition: our programme for government’ stated that the government will make every effort to prevent tax avoidance.

As part of Budget 2011 the government published ‘Tackling tax avoidance’ which set out our anti-avoidance strategy. The 3 principles are:

• preventing avoidance at the outset
• detecting it early where it persists
• counteracting it through legislative change and challenge through litigation

At Budget 2012 (PDF) we announced new guidance on the General Anti-Abuse Rule (GAAR), following recommendations from a report into tax avoidance (PDF) led by Graham Aaronson in 2011. The guidance will come into affect with the Finance Act 2013, due to be published in summer 2013.

In his December 2012 Autumn Statement, the Chancellor of the Exchequer said: ‘There are still too many people who illegally evade their taxes, or use aggressive tax avoidance in order not to pay their fair share’ and set out the government’s commitment to taking action against these people.

In December 2012 we published ‘Closing in on tax evasion: HMRC’s approach’, which sets out our approach to tax evasion in more detail, concentrating particularly on how we will use third party data.

In the 2013 Budget, HMRC published the report ‘Levelling the tax playing field’ which highlighted the successes HMRC has had in tackling avoidance, evasion, criminal attack and debt since 2010. HMRC also published its offshore evasion strategy ‘No safe havens’ which sets out HMRC’s approach to tackling offshore evasion.

At the G20 meeting of finance ministers in July 2013, Chancellor of the Exchequer George Osborne welcomed the OECD BEPS action plan to address profit shifting by multinational corporations. The action plan includes 15 specific proposals, which will be taken forward over the next two years.

In 2011 to 2012 HMRC brought in a record £16.7 billion of additional revenues from compliance activities. HMRC also protected £2.5 billion of revenue by preventing organised criminal attacks, and defendants were convicted in 85% of criminal cases taken to court.

The difference between tax avoidance and evasion

Tax avoidance is bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage. It involves operating within the letter – but not the spirit – of the law. Tax evasion is when people or businesses deliberately do not pay the taxes that they owe and it is illegal.

Appendix 1: tax avoidance and evasion and developing countries

This was a supporting detail page of the main policy document.

Tax avoidance and evasion is particularly an issue in developing countries as they may not have the capacity and resources to collect the tax which they are owed.

In May 2013 we announced a new capacity building programme, the Developing Countries Capacity Building Unit, to set up projects working with Ethiopia and Tanzania in partnership to strengthen their tax administration. The unit is funded by the Department for International Development (DIFD) and run by HMRC.

Through the new programmes HMRC and the Tanzanian and Ethiopian authorities will work together to tailor HMRC best practice to the infrastructure and resources available to help these countries in order to strengthen their tax administrations. This could be in areas such as tax inspector training, improving the revenue authority’s website, developing a complaints handling process, or bringing in a risk management system.

Since 2010 there has been an annual 40% increase in revenue collection in Ethiopia, supported by the first phase of HMRC’s partnership with the Ethiopian authorities.

Appendix 2: making it easier to find out who owns a company

This was a supporting detail page of the main policy document.

Beneficial ownership is a term used to describe who ultimately owns a company. A small minority of businesses make it extremely hard to understand who ultimately owns and benefits from a business, using complex company structures to conceal the information needed to collect tax.

Ahead of the G8 summit that the UK held in June 2013, we announced new rules to bring in further transparency on whom ultimately owns and controls companies.

This information is to be held in a central registry maintained by Companies House, where it will be accessible to law enforcement agencies and tax authorities.

G8 leaders also agreed to publish action plans on this, to ensure that this is considered internationally too in the global fight against tax evasion and avoidance.

This action will make it harder to launder money, evade and avoid tax, finance terrorism, bribe officials, hide stolen assets and evade financial sanctions. Tax authorities will be able to see who owns every company to collect the tax that they are owed.

Appendix 3: minimising the hidden economy

This was a supporting detail page of the main policy document.

Most people pay the tax they owe, but a small minority work in what we call the ‘hidden economy’. Their income is not declared for tax purposes - working like this, perhaps for cash-in-hand, is referred to as the ‘hidden economy’. They may be unknown to HMRC, or registered as paying tax on some income, but have further hidden income sources.

Our research suggests that people’s attitudes and behaviours can be affected by any changes to their standard of living:

• people are finding new ways to boost household income, and are more reluctant to declare it for tax
• customers are seeking good deals to save money, and businesses often feel they help customers by offering cheaper (tax-free) prices
• people who develop a money-spinning hobby are less likely to call it a business, or believe they are not earning enough to make it worth declaring

What we are doing

HMRC aim to change the behaviour of people tempted into the hidden economy by:

• supporting new businesses with educational guidance and tools to help them pay the right tax, and working with colleges and e-trading sites to tailor tuition to people’s needs
• making it easier for people to pay the tax they owe; for example, through providing new online services and introducing a simpler income tax system for small businesses
• identifying those outside the tax system through matching details we hold, such as using property data to detect undeclared rents from landlords
• helping people to come forward to voluntarily disclose income through campaigns, where we focus on targeting a specific type of work or occupation, while taking a tougher approach to businesses who refuse to do so
• using taskforces to target specific areas, such as location or sector, where people do not comply with tax rules. We are expecting to recover more than £3 million through the efforts of our team sent recently to investigate the hidden economy in the second-hand motor trade in the Midlands. We are aiming for a further £3 million by probing hidden wealth in the same area - looking at people with offshore accounts and those living lifestyles beyond their obvious means, through income that we suspect is undeclared

Uncovering secret earnings

Tax we are owed that has not been paid makes up the tax gap. The Government is investing almost £1 billion to close the gap as non-compliance puts an extra burden on the honest majority, while making it harder for registered businesses to compete.

We estimate the tax gap to be about £35 billion, with £5.4 billion or 15% due to the hidden economy.

HMRC’s work pays off

• HMRC have more than 600 staff in our specialist hidden economy teams who identify those who should be paying more tax, working with wider compliance teams, aided by risk and intelligence experts
• HMRC investigated more than 19,300 people suspected of working in the hidden economy in the tax year 2012 to 2013; as a result we recovered more than £160 million in tax
• HMRC issued nearly 1,400 penalties in the tax year 2012 to 2013 for deliberate tax evasion in the hidden economy
• we secured almost £2.5 million with help from the UK Border Agency from people exploiting illegal workers. HMRC now work with Border Force to tackle this issue

HMRC are also working with others to unmask the hidden economy including:

• Trading Standards, the Vehicle and Operator Services Agency and the Department for Work and Pensions to identify uninsured drivers and benefit cheats
• local authorities and Home Office immigration enforcement to investigate exploitation of migrant workers and multiple occupation of houses
• London boroughs and police to tackle rogue landlords charging cash-in-hand rents and exploiting vulnerable people living in sub-standard or unsafe homes

Legislation introduced in September 2013 means HMRC can use data from credit and debit card companies on sales made by retailers, to cross check against their VAT registrations and business income declared on tax returns.

You can report suspicious earnings via the HMRC website.

Appendix 4: tackling alcohol fraud

This was a supporting detail page of the main policy document.

Alcohol duty fraud is big business and costs taxpayers around £1 billion a year. The problem has grown since the introduction of the European Single Market in 1993. We are not talking about people sneaking in a few cases in their van or car. These days we see criminal gangs masterminding the sale of illegal drink through various outlets.

They exploit the EU rules which allow goods usually liable for excise duty to move between warehouses with duty unpaid until released for drinking in the UK. False documents are commonly used to sell illicit consignments of alcohol to wholesalers, cash and carry firms, small retailers and the leisure sector. This undercuts the legitimate suppliers.

What we are doing

Alcohol duty fraud is one of the largest tax crimes in the UK and HM Revenue & Customs staff are working hard to reduce the amount of fraud committed. Our work will be helped by the introduction of a registration scheme for wholesalers this year, which was announced by the Government in the December 2013 Autumn Statement.

The scheme will increase our ability to remove illicit alcohol from the market because wholesalers will have to be approved by HMRC, before they start trading.

HMRC are also:

• working with the new National Crime Agency and Border Force in our criminal investigations and gathering information on suspected scams and criminals
• using responses from a recent public consultation to make a decision on measures to clamp down on alcohol fraud. It follows a similar exercise in 2012 and looks specifically at plans to make registered excise traders take more responsibility to prevent fraud
• setting up a joint alcohol anti-fraud taskforce comprising stakeholders, including Border Force, Trading Standards, trade representatives, and senior figures from the alcohol industry
• dealing more robustly with those found holding or moving illicit goods
• further tightening our alcohol policy and domestic regulations to reduce opportunities for fraud
• increasing cooperation with other EU member states on fraud
• continuing to press for changes to the EU legal framework to prevent the current abuse of the EU-wide duty suspension system

Our success in tackling drinks fraud

Helped by Border Force, HMRC have:

• protected more than £600 million in revenue through enforcement in the tax year 2012 to 2013
• seized 12.7 million litres of alcohol, worth £25 million
• recovered £130 million of lost taxes
• levied more than £52 million in penalties

Some of the scams uncovered

Three men were jailed in June 2013 for trying to evade more than £4.7 million in tax using counterfeit labels. At their home, thousands of litres of alcohol were seized – including carrier bags containing £45,000 in cash.

One of the biggest smuggling frauds was worth £50 million a year in unpaid duty and VAT. The case in 2012 saw a gang leader jailed for ten years and three others get a total of 12 years. Their scam operated from an Essex warehouse. They bought beer, wine and spirits from bonded warehouses in France, imported it duty free, and sold it on without duty.

Three men who made potentially lethal fake vodka using industrial alcohol were jailed in January 2013. The illegal plant had the potential to cost almost £500,000 in lost revenue. The ‘vodka’ was found to have dangerous levels of methanol which is used in antifreeze.

Illicit beer

It is estimated that between six and 13% of the beer we drink is illicit - that means £550 million of potential tax is lost every year. About 28,000 lorry loads of beer are estimated to be smuggled across the UK border each year to and from mainland Europe. Every lorry load can net the criminals involved a profit of around £18,000. A typical lorry load of illicit beer would cheat the Exchequer out of about £20,000 in excise duty and VAT, based on a 40-foot vehicle carrying 20,000 litres, in 440ml cans at 4% strength of alcohol by volume.

Safeguarding spirits

We are making it easier for consumers here and abroad to identify genuine products. The Spirit Drinks Verification Scheme, which came into effect on 10 January, is designed to protect the reputation and authenticity of spirit drinks produced in the UK, from a specific geographical location.

We are starting by checking the processes involved in the production of Scotch whisky. We will then publish a list of verified businesses and items, such as company labels.

Scotch whisky accounts for about 25% of the UK’s total food and drink exports. Its export value was £4.3 billion in 2012.

Appendix 5: preventing tax evasion

This was a supporting detail page of the main policy document.

Tax evasion is where there is a deliberate attempt not to pay the tax due. It is illegal. While the vast majority of UK taxpayers declare all their income and pay the tax they owe, a small number choose to break the rules. The aim of HM Revenue & Customs is not only to make sure people pay the right amount of tax, but to ensure that they do not gain an unfair advantage by evading their tax.

What we are doing

Our goal is to prevent tax evasion by making it easier to comply with the tax rules and to encourage people to meet their obligations voluntarily.

We use an intelligence and risk-led approach to identify and tackle evasion.

Our response is driven by the behaviour we find - the more entrenched the non-compliance, the more robust our response.

Our high-tech analysis system, Connect, combined with access to a wide range of data sources, allows us to identify evasion at the touch of a button.

We use a variety of tools from financial penalties and civil litigation through to criminal prosecution against people who deliberately evade paying their tax.

We aim to change the behaviour of known evaders through intense scrutiny of their tax affairs and the threat of tougher action if they break the rules again.

HMRC work also includes:

• setting up more than 60 regional taskforces across the UK since May 2011. They are aimed at high-risk sectors, such as illegal alcohol and tobacco sales. Our taskforces brought in more than £96 million, and resulted in 80 cases for criminal investigation
• a publicity campaign which increases the perception that people will be caught if they evade their taxes. For example, using billboards and radio adverts across the UK to carry our message that we are ‘closing in’ on undeclared income. We are following that up with a new wave of publicity to reinforce our position that we are tougher than ever on evasion
• publicly naming deliberate defaulters. We publish a list of people who have incurred a penalty for deliberately giving us inaccurate documents or failing to comply with our rules, where there is more than £25,000 of tax at risk
• placing known tax evaders under closer scrutiny for five years by our Monitoring Serious Defaulters team

Investment

HMRC were given more than £150 million of additional investment by the Government in the December 2013 Autumn Statement, to spend over the next three years. This investment will be used to continue to tackle tax avoidance and evasion, as well as reduce fraud, error and debt in the tax credits system. Our work has also been bolstered by a range of new measures covering offshore evasion and trading in illicit goods.

The impact of evasion

The tax gap, which is the difference between what we collect and the tax that is theoretically owed, was £35 billion in the tax year 2011 to 2012, or 7% of total tax liabilities.

Tax evasion accounted for £5.1 billion, the hidden economy accounted for £5.4 billion and criminal activity £4.7 billion of the tax gap.

Nearly half the tax gap, 47.7%, is down to non-payment by small and medium-sized enterprises (SMEs), and while much of this is due to error, there is a significant risk of evasion among a small minority of SMEs, which we are tackling.

HMRC work so far:

• HMRC criminal investigations teams brought in more than £1 billion in receipts and through preventing revenue loss in the tax year 2012 to 2013
• 540 people were convicted of tax evasion in the tax year 2012 to 2013. This acts as a strong deterrent to others tempted to evade, and we check if our work is having the desired effect on taxpayers through research and surveys
• we are on target to bring at least 1,165 tax fraud prosecutions in the tax year 2014 to 2015, up from 165 in 2010 to 2011
• we have more than 3,500 cases under scrutiny in our Managing Serious Defaulters programme
• we issued more than 5,000 penalties in 2012-13 for deliberate rule-breaking
• our Connect system holds more information than the British Library and has already made 4 billion connections across customer records

We are also:

• using campaigns to persuade specific trades and professions via letters, adverts and social media to settle their taxes voluntarily, taking swift action against those who do not. We raised £4 million in one campaign aimed at people trading in online marketplaces
• tackling the use of insolvency to evade tax
• making offshore information exchange deals with other countries where some tax evaders might hide their money

Appendix 6: HMRC’s publicity campaign against tax evasion

This was a supporting detail page of the main policy document.

HMRC launched a national publicity campaign in November 2012 aimed at changing the behaviour of people who break the rules on tax or are tempted to break the rules.

Using billboards, posters on telephone kiosks and bus shelters, and radio and online adverts, this campaign was launched to raise awareness among those breaking the rules that HMRC is closing in on undeclared income.

The aim of the campaign is to encourage people who are not paying the right amount of tax to declare their unpaid tax voluntarily and pay it. The campaign supports our existing compliance activities and is targeted at anybody who has undeclared income, which includes all job sectors and professions, and all of our customer groups, including those who pay no tax at all.

Specific campaigns which we run have been effective in persuading people within those target groups to put their tax affairs in order, complementing our investigation and enforcement activities.

In February 2014, the Chancellor launched a new phase of the campaign, targeting taxpayers with money hidden in offshore accounts.

Appendix 7: dealing with the tax affairs of wealthy individuals

This was a supporting detail page of the main policy document.

Wealthy people often have complex tax affairs, so we use specialist teams to make sure they pay the tax they owe.

There are about 6,200 individuals in the UK who each have £20 million or more in net assets. Overall, this group pays £3 to £4 billion in income tax and Capital Gains Tax in a year. That’s why it’s important they comply with their tax obligations, and that we challenge those who don’t always play by the rules.

What we’re doing

We’ve been improving the way we handle the tax affairs of the wealthiest individuals after setting up our High Net Worth Unit in 2009.

It’s helping us to bring in extra compliance revenue every year, as we maximise the amount of tax we collect from this particular group of taxpayers.

So far, we’ve collected more than £1 billion in additional revenue since the unit was formed. This is against a target of £894 million.

We brought in additional revenue of £268 million in 2013 to 2014, which was a 20% increase on the year before.

We’d started by collecting an extra £85 million in revenue, during the first year of operation for the High Net Worth Unit, in 2009 to 2010.

We have also:

• reduced the number of outstanding tax returns from 11.9% to 3.4% in five years
• increased the number of wealthy individuals filing online to 96.4% in 2013 to 2014 which is an increase of 10% in four years

We have more than 400 specialists in our High Net Worth Unit dealing with the tax affairs of wealthy individuals.

Each person we deal with has their own customer relationship manager, so they are fully aware of their tax responsibilities.

The manager deals closely with their advisers and tax agents. This relationship helps prevent tax avoidance and evasion, by allowing us to develop a better understanding of the tax affairs of people with high net assets.

Wealthy individuals who we consider to be fully compliant with their tax obligations are also sent an ‘early certainty letter’ explaining that we won’t be carrying out extra checks on their tax return.

Dealing with avoidance and evasion

Wealthy individuals who are suspected of avoidance and evasion are dealt with in exactly the same way as anyone else trying to cheat the tax system. We:

• tell people they are being investigated more closely
• challenge individuals when they miss a tax deadline or deliberately send in what we believe is an incorrect tax return
• issue ‘accelerated payment’ notices so that the disputed amount of tax in an avoidance scheme is paid upfront to HMRC while the dispute is resolved
• try to settle tax disputes quickly and fairly, sometimes using tax tribunals
• take legal action in the courts if our civil powers and penalties do not have the desired effect

How the High Net Worth Unit works

Teams of specialist technical advisers support customer relationship managers in cases where complex issues need a more in-depth analysis of tax law. This ensures we are even-handed in solving disputes. It also helps us to settle difficult arguments in a way that meets our customer service standards and code of governance.

The unit also has a number of specialist teams:

• finance – for individuals connected to sectors such as investment funds, private financing schemes or equities and banking organisations
• rising stars – dealing with those whose wealth is increasing very quickly, and who might become high net worth individuals in the next few years
• Business Investment Tax Relief – handling claims for people not living in the UK who want to invest in UK businesses
• analysis and intelligence – gathering and analysing information on an individual’s behaviour, so we can better understand their interests and financial resources and investments

What we are doing next

In 2014 to 2015 we’re aiming to collect at least £225 million in additional tax revenue. We’ll do this by:

• continuing to work closely with wealthy individuals and their advisers to reduce the risk of tax avoidance and evasion
• responding robustly to the minority of people who cheat the system

Appendix 8: criminal investigations

This was a supporting detail page of the main policy document.

At the extreme end of tax evasion activity, organised criminal gangs make sophisticated attacks on the tax system itself by making false claims to repayments of tax credits on a massive scale. It’s essential that this criminal element is investigated and prosecuted.

HMRC is responsible for investigating crime involving all of the taxes and other regimes it deals with. It isn’t responsible for criminal prosecutions.

The decision whether to bring a criminal prosecution is made by an independent prosecuting authority. In England and Wales this is the Crown Prosecution Service. In Northern Ireland it is the Public Prosecution Service for Northern Ireland. In Scotland it is the Crown Office and Procurator Fiscal Service.

The HMRC Criminal Investigation Policy gives more detail on how and why a criminal, rather than civil, investigation is initiated.

HMRC’s criminal investigation powers

To counter the sophisticated criminal attacks on the UK tax system, HMRC needs similar criminal investigation powers to those that other law enforcement agencies have. In particular has the power to:

• apply for orders requiring information to be produced - production orders
• apply for search warrants
• make arrests
• search suspects and premises following arrest

These powers are strictly governed by legislation, and only trained members of staff are authorised to use these powers.

HMRC’s criminal investigation activity is also overseen by HM Inspectors of Constabulary, the Scottish and Northern Ireland inspectors and the National Audit Office. Complaints can be made to the Independent Police Complaints Commission, the Ombudsman and the Adjudicator.

Read for more detail on:

• the legal basis of HMRC’s criminal investigation powers
• the safeguards that are in place
• how HMRC officers are trained
• how intrusive surveillance is used
• how cross-border investigations are conducted

How HMRC investigates criminal activity

There are 3 areas within HMRC where staff are authorised to use criminal investigation powers:

• Criminal Investigation, including Internal Governance
• Specialist Investigations (Road Fuel Testing Unit)
• Risk and Intelligence Service, Intelligence Development & Integration

The Criminal Investigation directorate is responsible for all criminal investigations undertaken by HMRC, where criminal investigation has been determined to be the appropriate response to tax or duty fraud. Internal Governance is responsible for undertaking investigations into potentially serious disciplinary and criminal allegations involving HMRC staff.

Specialist Investigations (the Road Fuel Testing Unit) is responsible for the detection and disruption of the illicit supply, distribution, sale, storage and misuse of fuel for road vehicles.

The Risk and Intelligence Service is responsible for profiling and intelligence work. Risk and Intelligence Service, Intelligence Development & Integration requires the use of criminal investigative powers as part of its criminal intelligence development role.

These are the only teams in HMRC who are authorised to use HMRC’s criminal investigation powers. There is a complete separation of civil and criminal investigations. No one in HMRC dealing with civil enquiries, such as tax returns or claims for tax credits, can use criminal powers to further these enquiries.

Appendix 9: HMRC Campaigns

This was a supporting detail page of the main policy document.

HMRC runs campaigns that are designed to:

• help people to bring their tax affairs up to date
• help them keep them that way, and
• help stop them getting it wrong in the first place

These campaigns are part of HMRC’s approach to tax compliance.

How they work

We do this by:

• providing opportunities that make it easier to be compliant – including offering an incentive to self-correct
• bringing together a basket of activities to encourage voluntary compliance in the target population
• looking for opportunities to inform customers who are entering the targeted risk area for the first time
• using what is learned to help HMRC to improve processes to deal more efficiently with customers in the future

What they mean for customers

Our campaigns offer people a chance to get their tax affairs in order on the best possible terms. They provide tools and information to help people do that; to help people keep their affairs in order; and to help stop people getting it wrong in the first place.

Where people choose not to take the chance to set the record straight, we use the information, gathered before and during the campaign, to conduct follow-up work. This includes investigations and prosecutions.

If you think you have unpaid tax that you want to report and pay to us, please contact the Campaigns Voluntary Disclosure Helpline, 8.00 am to 6.30 pm, Monday to Friday, on 0300 123 1078

The results of HMRC campaigns

Since 2007, HMRC campaigns have collected over £610 million in tax from people coming to us, and over £395 million from a large number of follow-up activities.

Campaign	Total Revenue as at 31 January 2015
Tax Health Plan	£70,961,034
Tax Catch Up Plan	£2,968,808
Value Added Tax Outstanding Returns	£38,696,945
VAT Initiative	£22,271,526
Plumbers Tax Safe Plan	£22,166,777
Electricians Tax Safe Plan	£15,803,609
E Marketplaces	£9,379,361
Direct Selling	£505,617
Tax Returns Initiative	£86,279,162
My Tax Return Catch Up	£33,137,621
Property Sales	£8,245,782
Offshore Disclosure Facility	£512,190,000
Offshore New Disclosure Opportunity	£156,923,070
Campaigns Consequential Disclosures*	£5,536,921
Let Property	£20,017,365
Health Well Being Tax Plan	£936,315
Second Income	Update due 2015/16
Credit Card Sales	Update due 2015/16
Solicitors Tax Campaign	Update due 2015/16
TOTAL	£1,006,019,913

*These disclosures are from individuals not targeted by any Campaign who have voluntarily come forward and used the Campaigns disclosure line to tell us about undeclared income.

Current HMRC campaigns

Credit Card Sales Campaign

The Credit Card Sales Campaign is aimed at individuals or businesses that accept credit or debit card payments. It offers them an opportunity to bring their tax affairs up to date.

Find out more about HMRC’s Credit Card Sales Campaign, or call the Credit Card Sales Campaign helpline.

Second Incomes Campaign

The Second Incomes Campaign offers employees who have not declared additional untaxed income a chance to pay the tax they owe.

Find out more about HMRC’s Second Incomes Campaign, or call the Second Incomes Campaign helpline.

Let Property Campaign

The Let Property Campaign targets the residential property letting market and offers a chance for landlords in this sector to get up to date or put right any errors they have made and then remain compliant. So far over 9,500 landlords have taken the opportunity to bring their tax affairs up to date.

Find out more about HMRC’s Let Property Campaign or call the Let Property Campaign helpline.

Past HMRC Campaigns

Solicitors Tax Campaign

The Solicitors Tax Campaign closed on 10 June 2015. It offered a way to disclose any previously undisclosed income for those within the legal profession (individuals or solicitors in a partnership or company).

If you think you have unpaid tax that you want to report and pay to us, please contact the Campaign Voluntary Disclosure Helpline on 0300 123 1078 - Monday to Friday, 8am to 6:30pm.

Health and Wellbeing Campaign

The Health and Wellbeing campaign gave professionals working in Health and Wellbeing an opportunity to bring their tax affairs up to date on the best possible terms. This included physiotherapists, chiropractors, chiropodists, osteopaths, occupational therapists, those working in homeopathy, acupuncture, nutritional therapy, reflexology, nutrition, as well as psychology, speech therapy, arts therapy.

The deadline for making your disclosure and paying what you owe was 6 April 2014.

People who missed the opportunity can still make a disclosure by using the Campaign Voluntary Disclosure Helpline on 0300 123 1078 - Monday to Friday, 8am to 6:30pm.

The e-learning course Tax guide for Health Professionals is available if you need further guidance.

My Tax Return Catch Up Plan

The My Tax Return Catch Up Plan was aimed at people who received a tax return or notice to file a return for years up to and including 2011-12, and who had not acted. People had until 15 October 2013 to file all their outstanding tax returns and pay what they owe. After that, HMRC began to take a much closer look at their tax affairs. By using this campaign to come forward, customers received the best terms available.

Property Sales Campaign

The Property Sales campaign is a chance for people to bring their tax up to date if they have sold a residential property, in the UK or abroad, that’s not their main home. If people made a profit but have not told HMRC, they might not have paid the right amount of tax. To take advantage of the best possible terms people needed to have voluntarily disclosed income or gains and to have paid what they owed by 6 September 2013.

The disclosure deadline has now passed and our follow up compliance work focused on those who should have come forward is underway. Although the terms on offer during the disclosure are no longer guaranteed, it will still be better for anyone who has something to tell us about to come forward.

Direct Selling campaign

The Direct Selling campaign gave people involved in direct selling, who had not told HMRC about all of their income, a chance to bring their tax up to date on the best possible terms. Direct selling is where people sell directly to customers usually door to door or in customers’ homes or the workplace.

The voluntary disclosure opportunity offered as part of the Direct Selling campaign closed on 28 February 2013. Cases are now being considered for follow-up action.

VAT Outstanding Returns campaign

The VAT Outstanding Returns campaign was a chance for those who ere registered for VAT, but had not sent in all of their VAT Returns, to bring their VAT Returns and payments up to date on the best possible terms.

The voluntary opportunity offered as part of the VAT Outstanding Returns campaign closed on the 28 February 2013. The identification of cases suitable for compliance checks and criminal investigation is ongoing.

Tax Return Initiative

The Tax Return Initiative was aimed at higher rate tax paying individuals who had been sent a Self Assessment (SA) tax return, or had been told they should send one in, but had not submitted a return.

The Tax Return Initiative voluntary disclosure opportunity closed on 2 October 2012. HMRC is following up against those targeted in this campaign who chose not to take part. This includes issuing estimates of the amount of tax owed and collecting payment through court action or by using a debt collection agency.

e-Marketplaces campaign

The e-Marketplaces campaign was a chance for those who use electronic marketplace websites to buy and sell goods as a trade or business, but who had not paid what they owe, to bring their tax affairs up to date on the best possible terms.

The voluntary disclosure opportunity offered as part of the e-marketplaces campaign (e-MDF) closed in September 2012. HMRC is successfully continuing to use the data gathered to support the campaign to identify those who should have come forward but chose not to. HMRC are looking for cases suitable for investigation.

Tax Catch Up Plan for tutors and coaches

The Tax Catch Up Plan is for those who provide private tuition, instruction and coaching, either as a main or as a secondary income - which they choose not to tell HMRC about. Whilst the time limited voluntary disclosure opportunity closed on 31 March 2012 it is still better to come forward to HMRC as we continue to look for cases suitable for investigation

The VAT Initiative

The VAT Initiative campaign focused on individuals and businesses operating at or above the VAT threshold who had not registered for VAT. Those that came forward were given help by HMRC to pay what they owe and to claim VAT repayments. HMRC continues to help those that came forward to get their affairs in order.

HMRC continues to follow up on those businesses where the information held suggests that the VAT turnover threshold had been exceeded. This could lead to the compulsory registration of businesses and a possible ‘failure to notify’ penalty of up to 100 per cent of the VAT due.

Electricians’ Tax Safe Plan

The Electricians Tax Safe Plan was an opportunity for people who install, maintain and test electrical systems, equipment and appliances, who had not told HMRC about all their income in the past, to bring their tax affairs up to date on the best possible terms.

The voluntary disclosure opportunity closed in August 2012.

Plumbers’ Tax Safe Plan

The Plumbers Tax Safe Plan was a chance for people working as plumbers, gas fitters, heating engineers and associated trades, who had not told HMRC about all their income in the past, to bring their tax affairs up to date on the best possible terms.

The voluntary disclosure opportunity closed in August 2011. As at 30 June 2012, six plumbers have been convicted with more expected to follow.

Medics Tax Health Plan

The Medics Tax Health Plan first offered a voluntary opportunity for doctors and dentists, with tax to pay, to get their affairs up to date with the benefit of a fixed penalty.

The voluntary opportunity closed in June 2010. The disclosures included one individual payment of over £1 million by a doctor and one of over £300,000 by a dentist. Our risk and intervention programme is ongoing so for those who need to it is still better to come forward to HMRC.

New (offshore) Disclosure Opportunity

The New Disclosure Opportunity was designed to provide one final chance for UK based individuals and businesses, with unpaid tax linked to an offshore account or asset, to make a disclosure and put their affairs in order. 15 individual payments over £500,000 four of which were in excess of £1 million.

The New (offshore) Disclosure Opportunity was open to those with any offshore interest, assets or accounts. Data from financial institutions was provided and HMRC has used this and other information to open thousands of enquiries.

Offshore Disclosure Facility

The Offshore Disclosure Facility was the first HMRC campaign and ran between April and November 2007.

The Offshore Disclosure Facility was based on data obtained from five major UK financial institutions. Like the New (offshore) Disclosure Opportunity, it gave people or businesses with unpaid tax connected to an offshore account or asset an opportunity to make a full disclosure of liabilities and to pay duties, interest and penalties due.

The campaign was the first of its kind and provided information and understanding of the way offshore accounts and assets were used that was carried into the first full offshore campaign (the New (offshore) Disclosure Opportunity) covering all institutions offering offshore facilities to UK based entities. After the ODF HMRC made follow up enquiries, mainly based on data gathered following a successful application for notices on five major UK financial institutions.