When Does HMRC Choose to Prosecute?
HMRC generally reserves criminal prosecution for cases involving deliberate or dishonest conduct. Common triggers include systematic fraud, abuse of a high-responsibility position, submission of forged documentation, materially false statements made during a civil audit, or a history of previous fiscal offences.
The Finance Act 2024 — Increased Sentences
Section 32 of the Finance Act 2024 increased the maximum term of imprisonment for the most serious tax fraud offences — including Cheating the Public Revenue — from 7 to 14 years. This reflects the government's intention to treat serious tax evasion with the same severity as other high-level financial crimes.
Failure to Prevent the Facilitation of Tax Evasion
Under the Criminal Finances Act 2017, companies can be prosecuted if an associated person facilitates tax evasion. This is a strict liability offence — the company can be guilty even if the board was entirely unaware. The only available defence is to demonstrate that reasonable prevention procedures were in place.
Code of Practice 9
Where HMRC suspects fraudulent conduct but offers the taxpayer an opportunity to make full and complete disclosure, it will proceed under Code of Practice 9 — a civil process. However, failure to make a complete disclosure or any attempt to mislead HMRC during COP9 can result in escalation to a criminal enquiry.
What to Do if You Are Under Investigation
If you are contacted by HMRC's Fraud Investigation Service, have been arrested, or are asked to attend an interview under caution, seek specialist legal advice immediately. Do not speak to HMRC investigators without a solicitor present. The distinction between a civil and a criminal investigation can change rapidly.