HM Revenue & Customs’s (HMRC) elite ‘Offshore, Corporate and Wealthy’ unit (OCW) opened criminal investigations into 25 wealthy individuals over suspected serious criminal tax frauds last year, according to Pinsent Masons.
The OCW unit is part of HMRC’s Fraud Investigation Service (FIS), which was set up in the wake of the Panama Papers leak in 2016 with a brief to target deliberate, high-value tax evasion, fraud and money laundering. Wealthy individuals, which are those earning over £200,000 ($246,049, €227,514) each year, are a major part of OWC’s focus.
Investigations by OCW include that of BHS owner Dominic Chappell, who was sentenced to six years of imprisonment in 2020 for tax evasion, and the current investigation into Bernie Ecclestone, who is due to stand trial later this year following a complex and worldwide criminal investigation.
Over the past decade, HMRC’s approach to economic crime enforcement has evolved to focus on the largest and most complex cases of tax fraud. The data reveals that, in 2009/10, HMRC undertook just 165 prosecutions, protecting approximately £150m in tax revenue.
But, although by 2019/20 the number of prosecutions had risen almost fourfold to 573, the revenue protected had increased 33-fold to approximately £5bn.
‘Secure prosecutions’
Andrew Sackey, partner at Pinsent Masons and former head of OCW, said: “As the name implies, OCW is the spearhead for HMRC’s drive to tackle the most complex and impactful cases of tax evasion and fraud. It is aiming to secure prosecutions against corporates or wealthy individuals whose deliberate actions are believed to have defrauded the public purse of hundreds of millions of pounds.
“The Treasury consistently provides HMRC with significant funds and resources each year to investigate a range of serious non-compliance including the suspected conduct of high net worth individuals. If the amount of tax revenue it protects through these investigations keeps rising, the government is likely to continue to invest in this high-end form of tax enforcement.”
He adds that HMRC is rapidly growing its use of data-sharing between both government agencies worldwide and increasingly engaging in strategic public-private partnerships.
“HMRC and its counterparts overseas are making it increasingly likely that tax irregularities, evasion and fraud will be detected,” Sackey said. “The amount of data shared between them each year is growing substantially – as it their ability to process and understand that data to identify enforcement opportunities. As financial institutions are increasingly brought into that fold as trusted partners, that process is only going to accelerate.”
A spokesperson for HMRC said: “Our record of tackling serious fraud speaks for itself. We take robust action to make sure that everyone pays the tax due. In recent years, we have deliberately focussed on the most harmful, complex and sophisticated frauds using both criminal and civil interventions.”
