How many people has HMRC prosecuted for offshore evasion?

There’s a new report of the Public Accounts Committee out today. You can read it here.

Under its new Chair, Meg Hillier, it continues with many of the themes developed under her predecessor Margaret Hodge. It slams HMRC’s management of tax expenditures (a subject I tackled only a few days ago here and to which I expect to return in the coming days and weeks); it characterises as “unacceptable” HMRC’s customer service; and makes a number of detailed criticisms of how HMRC reports its progress on tackling tax avoidance and evasion.

What I want – briefly, for the point won’t take long – to focus on is some clarity the Report finally delivers on what HMRC has actually done to tackle offshore tax evasion by the wealthy. This has been a particular bug-bear of mine: I wrote a number of times on the issue in the early Spring culminating with this. And the new PAC report very much franks my analysis stating, starkly:

HMRC’s investigations do not lead to sufficient prosecutions to provide an effective deterrent, particularly for wealthy individuals who hide their assets offshore.

It then sets out this startling statistic:


That’s right, eleven in the last five years.

For scale, we know that the HSBC disclosures led to HMRC becoming aware of the names of 3,600 potential evaders – and in consequence HMRC “encouraged” 500 people to take advantage of the Liechtenstein Amnesty. Offshore tax evasion really has been, as Margaret Hodge put it,  “a risk worth taking” (see Question 102 here).

But worse even than that is what that number – eleven in five years – reveals about HMRC’s attitude to public reporting.

Back at the height of the furore around HMRC’s handling of the HSBC data – and in the run up to a General Election where it was a key political issue – HMRC released this document, entitled: ‘Statement by HMRC on tax evasion and the HSBC Suisse data leak.’

At the time, I was deeply sceptical of some of claims made in that document. I said:

What we know is that in a document designed to defend its record of achieving criminal convictions in tax evasion and the HSBC Suisse tax leaks – that being its title – HMRC is relying on convictions it has achieved in benefit fraud cases.

And that conclusion too is franked by this morning’s PAC report.

Here’s an extract from HMRC’s 2014 annual report on tackling offshore evasion: ‘No Safe Havens.’ And at page 11 it contains this table:


revealing 2,962 actual and prospective charging decisions.

Did only 11 of those lead to convictions? No. We can now conclude that by including that table – which includes charging decisions for such matters as wrongfully claiming tax credits – HMRC set out to mislead you as to its success in tackling offshore tax evasion. Not lying – because the document does not explicitly state that those are charging decisions in relation to offshore evasion – but an attempt to mislead.

That’s a serious charge – so don’t take my word for it. Have a look at that table and the context in which it appears. Look at the document and at the page. It appears in a document about offshore tax evasion. As the screen-grab above shows, it appears at the end of a paragraph talking about offshore tax evasion. Nowhere I can see in that document is it made clear that that table has nothing to do with offshore evasion.


There is some evidence that the Government is at long last taking tax evasion seriously. You can see here a series of consultation papers on new civil and criminal matters. Let’s hope those measures are delivered. Let’s hope they are utilised by HMRC. Let’s hope they work. Because the Coalition Government and HMRC’s response to offshore tax evasion by the wealthy was a disgrace.

9 thoughts on “How many people has HMRC prosecuted for offshore evasion?

  1. Jolyon,

    The conclusion is inescapable, a casual reader would be forced to the conclusion that HMRC is prosecuting 2,962 cases of alleged offshore evasion.

    As regards the question as to why so few prosecutions for offshore evasion, my theory is simple. It is to do with short term “value for money” (perceived, I should say) and a desire to protect HMRC’s success rate in the courts. I don’t have a great deal of experience in the tax litigation field but I imagine that prosecuting an offshore evasion case is more costly than prosecuting a benefit fraud case (significantly so, I would imagine). I suspect that HMRC are also much more confident of success (certainly quick success) with the benefit fraud case, thus improving their strike rate.

    This might make sense if the purpose of the prosecution were seen as a simple matter of recovering underpaid tax (or overpaid benefit). That, of course, overlooks the important deterrent factor of prosecutions. I am sure that HMRC realises this but I am equally sure that their (perceived) desire to build and maintain an impressive strike rate, together with a desire for quick and easy wins, will always win out.

  2. Thanks David. I think all of that is true. (Save perhaps that it’s not just the “casual” reader. I read, carefully, the “No Safe Havens” document shortly after it was published and I also reached that conclusion).

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  4. Looks to me like their KPI’s need rewriting.

  5. The problem is that they are a non-ministerial department and effectively self-regulate. Yes, the PAC can criticise their performance but that’s about it.

    This about two things (in my opinion): a failure of successive governments to properly invest in HMRC and a gross failure of leadership within the department.

  6. I agree wholeheartedly with the comment referencing the continued lack of investment in HMRC, and also with the comment on the quality of leadership, which I suspect will have led directly to the misleading report. HMRC currently has increased leadership skills as a priority. But there are many fundamental issues which cannot be addressed by requiring attendance at a one course on getting the most from your team. HMRC is led by individuals who either have no tax professional background or have gained one from one of the big 4 accountants. They flit from role to role and constantly cover up the massive holes caused by the lack of trained staff. They pin their hopes on a digital future while business as usual cannot be sustained. It is obvious that prosecuting off shore evsders is difficult and resource intensive. That is why it is so rarely undertaken. There is no easy fix but more resource at every level is essential as well as leaders who understand what needs to be done.

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  8. I can’t comment on prosecutions that might have been taken because I don’t know the cases. I think any Fraud prosecution is difficult (look at the SFO’s record) and possibly even harder for tax. With verdicts such as Harry Redknapp and the dog you can appreciate the risk inherent in any criminal prosecution. Given the complexity of tax laws and obtaining evidence to UK criminal standards it would certainly be resource intensive.
    Which of course is exactly why HMRC needs more resources to do that, not additional cuts. One then asks whether those MPs who either voted for spending cuts, or would have made them as a Government, ought to show a little contrition? Civil Servants don’t set Departmental Budgets. If HMRC lost 15% of its Budget under the Coalition, and had what was effectively a 5 year pay freeze, is it such a surprise they struggle to do everything?
    I think I’d disagree on HMRC leadership flitting around with no tax professional background. Even if it were 100% accountant or lawyers I suspect the outcomes would be little different, given the political choices made on funding and new services. The drive for digital is partly to square that circle of less money and higher expectations.
    But the DG for Business is a HMRC career tax professional, the DG for Enforcement and Compliance is a career tax person (albeit mostly in Australia), the Commissioner is a long standing tax lawyer, the CEO is a lawyer by training.
    Surely not all of them have to be solely trained and recruited in HMRC. That sounds very similar to the former Customs and Excise who were accused (with some justification) of being too insular and developing a culture which led ultimately to their losing their prosecution powers (remember the Roque Report and London City Bond).
    I don’t know if there was any intent to mislead on the numbers. It might have helped if the PAC, or TSC, or indeed anyone, had simply asked the precise question?

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