The Spring Budget announced measures to tackle tax fraud and avoidance, to help reduce the tax gap to protect taxpayers and funding for public services.

Sentences doubled for tax fraud

The Government has announced that the maximum custodial sentence, in relation to the worst cases of tax fraud, has doubled from seven years to 14 years. This indicates HMRC’s intention to increase criminal prosecutions for tax fraud, but that the current maximum prison sentence was not seen as proportionate in relation to some of the tax frauds being investigated.

Consultation on a criminal offence for promoters failing to comply with stop notices

Also announced was an upcoming consultation, in relation to the introduction of a new criminal offence, for promoters of tax avoidance who fail to comply with a stop notice – a legal notice from HMRC to stop promoting a tax avoidance scheme. This indicates that HMRC has seen evidence that stop notices are not being complied with and further highlights HMRC’s intention to criminally pursue those contributing to or facilitating the tax gap in the worst ways. The opening date for the consultation has not yet been announced.

Levelling up HMRC’s capability to collect tax debts

An investment of £47.2 million was announced to build on HMRC’s capability to collect tax debts, which includes support for those who are temporarily unable to pay. We have recently experienced HMRC’s focus turning to bringing in tax liabilities which are due, following the support offered during the pandemic. This is further signalled by the announcement of this new investment. It is unclear what the support for those temporarily unable to pay will be, but with HMRC’s late payment interest rate currently at 6.5%, this has never been more important.

For more on the above measures, or for any tax disputes queries, contact Danielle Ford, Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.