Tax evasion warning

An Lancashire tax expert is warning there is more likelihood of individuals and businesses being subject to criminal prosecution after the Government announced a major crackdown on tax evasion.

The Government’s chief prosecutor Keir Starmer has revealed the Government is planning to take five times more cases to court – with 7,500 a year by 2014-15, compared to approximately 150 convictions in 2010.

Nadeem Hussain, head of tax at Pierce business advisory and accountancy group in Blackburn, warns that HMRC is expected to target smaller businesses as well as large global firms, with tax evasion reportedly depriving the Government of £14 billion each year.

He said: “It is clear that what we are seeing now is a reorganisation of resources to target certain types of businesses and tax avoidance schemes undertaken by individuals. Whilst it is quite correct to target tax evasion we are again seeing some blurring of the boundaries between tax avoidance, which is legitimate, and tax evasion which isn’t.

“Whatever we may think about the moral issues behind certain tax avoidance arrangements they should not be confused with tax evasion.”

Nadeem Hussain agrees that the number of criminal prosecutions to date where tax evasion is identified is very low and an increase to these numbers should act as a deterrent.

He added: “Recently the right to name and shame those evading tax has been made law, and I think we will see more of this kind of action being taken in coming months.

“It is important to ensure appropriate professional advice is taken if HMRC opens an enquiry alleging a failure to pay a significant amount of tax.

“Although HMRC will continue to seek to settle most enquiries without resorting to the threat of criminal prosecution it is more critical than ever before to ensure that this risk is removed where tax avoidance rather than tax evasion is alleged.”