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HMRC's Inaction: Corporate Tax Evasion Legislation Falls Short

VAT Fraud Investigation

HMRC's Inaction: Corporate Tax Evasion Legislation Falls Short


In a surprising revelation, it has come to light that HMRC has not charged a single company under landmark legislation to combat corporate tax evasion. The implications of this lack of enforcement are significant, raising questions about the effectiveness of the legislation and HMRC's commitment to tackling financial wrongdoing. In this blog, we delve into the details of the situation, examining the background of the legislation, its purpose, and the potential reasons behind HMRC's failure to utilize its enforcement powers.

The Landmark Legislation:

The legislation in question is the Criminal Finances Act 2017, introduced with the intention of cracking down on corporate tax evasion. This act granted HMRC enhanced powers to charge companies and partnerships operating in the UK that failed to prevent their employees or associates from facilitating tax evasion, regardless of where in the world the tax was evaded.

One key aspect of the legislation was the introduction of "strict liability," meaning that companies could not plead ignorance to evade criminal charges. Prosecutors did not have to prove intent, making it easier to secure convictions. The law also threatened unlimited fines in cases of established wrongdoing, providing a robust framework to deter companies from engaging in tax evasion.

The Alarming Reality:

However, recent data, obtained under freedom of information laws, reveals that HMRC has not charged a single company under the Criminal Finances Act 2017 since its enactment six years ago. This startling revelation has raised concerns among critics, who argue that the lack of enforcement undermines the deterrent effect of the legislation, rendering it essentially toothless.

Critics' Perspective:

Prominent figures, including Margaret Hodge MP, have criticized HMRC's inaction, labelling the findings as "appalling." The lack of any prosecutions under the Corporate Criminal Offences clause, designed to make prosecuting businesses for tax evasion easier, is deemed a serious failure by those advocating for more robust measures against financial crimes.

Critics argue that a deterrent that is not utilized is ineffective. The refusal to charge any company under the legislation has cast doubt on the credibility and impact of the law, raising questions about whether HMRC is adequately using the tools at its disposal to combat corporate tax evasion.

HMRC's Response:

In response to the criticism, HMRC contends that the Corporate Criminal Offences were introduced to encourage organisations to implement preventive measures against tax evasion. The agency claims that its efforts have driven a cultural shift towards anti-tax evasion awareness, leading to the adoption of new procedures across business sectors.

However, critics remain unconvinced, pointing out that criminal penalties are a more reliable means of changing behaviour. The over-reliance on civil penalties and fines, coupled with the lack of criminal prosecutions, has fueled scepticism about HMRC's commitment to effectively combatting corporate tax evasion.


The revelation that HMRC has not charged a single company under the Criminal Finances Act 2017 is a cause for concern. It raises questions about the effectiveness of the legislation and the enforcement approach adopted by HMRC. As the government aims to ensure fair taxation and prevent financial wrongdoing, it becomes imperative to address the reasons behind this lack of enforcement.

Whether it is a matter of political will, resource allocation, or inherent flaws in the legislation, urgent attention is needed. The public and stakeholders alike should be informed and assured that tax evasion, especially on a corporate level, will be met with meaningful consequences. A thorough examination of the situation is warranted to determine whether the existing legislation requires refinement or if HMRC needs to reassess its enforcement strategy to make the law more than just a paper tiger.

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Partner Nicola has a wealth of experience in dealing with all types of Indirect Tax Investigations (VAT).
Nicola has been VAT Inspector for over 20 years at HM Customs now HM Revenue & Customs. She was a Higher Officer for more than 10 years.
Her duties included carrying out vat inspections of all types and size of businesses dealing with technical issues to detecting evasion. Nicola recently joined MS Taxes as head of Indirect Tax Investigation.

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Tofail,Founding Partner and Tax Investigation Specialist


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Tofail is a qualified Chartered Accountant with over 15 years of experience in accountancy and taxation.
He has worked alongside a former Inspector of Taxes gaining invaluable insights of inner HMRC workings, which he utilises to support clients through tax challenges and steer clear from possible investigations.
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Tim has a wealth of experience dealing with all types of International Payroll Tax and IR35 Tax Investigations.
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Andrew began his career in HM Customs & Excise and subsequently moved to HMRC (then called the Inland Revenue) on appointment as one of HM Inspector of Taxes.
completing his training he was sent as District Inspector in charge of West Midlands and was soon transferred to Head Office as a fraud investigator in Enquiry Branch (now Fraud Investigation Services) where he spent eight years conducting Code of Practice 9 investigations on a wide variety of individuals, partnerships and companies.

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