Hmrc gifted new 'prosecution powers' as crackdown with 'dawn raids' loom

HMRC is ramping up its crackdown on tax evasion, with plans to boost prosecution powers and scrutiny over individuals and businesses. A significant escalation has been noted in HMRC's

action against suspected tax fraudsters, evidenced by an increase in dawn raids over the past year—648 were carried out in 2023/24. Additionally, HMRC initiated 430 new criminal cases and

undertook around 10,200 civil investigations into suspected fraud, resulting in approximately 17,000 penalties handed down for deliberate non-compliance, reports Birmingham Live. The agency

is also gearing up to achieve a government objective of raising individual prosecutions by a fifth by the end of this decade. Gideon Sanitt, partner at law firm Macfarlanes, remarked on the

change in HMRC's approach: "There has always been a lot of rhetoric about HMRC not targeting tax fraud strongly enough, but HMRC did not appear to have the same priority over

criminal prosecutions. "However, new funding, commitments to close the tax gap, and more direct measures like the whistleblowing scheme may represent a real shift in how HMRC deals with

fraud," Sanitt expressed Businesses are firmly in HMRC's sights as well, especially those neglecting to ensure their suppliers toe the line, as Debbie Jennings, VAT director at

accountancy firm Moore Kingston Smith, indicates. Jennings warned that simply looking the other way won't cut it anymore: "It is not possible to plead ignorance or turn a blind

eye". She added a stark warning for firms without appropriate due diligence practices: they could be hit with hefty VAT bills and penalties if HMRC cancels their input tax claims.

"In some circumstances, HMRC may even look to cancel your VAT registration and deny all input VAT recovery – including that incurred on entirely legitimate purchases," Jennings

highlighted. Rachel Reeves revealed in the Spring Statement that HM Revenue and Customs (HMRC) has been set the target of increasing decisions to prosecute tax fraud by 20% by the end of the

fiscal year 2029/30. This equates to approximately 100 additional cases based on the figures from 2023/24. HMRC is charged with conducting criminal probes to amass sufficient evidence,

which is then handed over to the appropriate prosecuting body to determine if a case should proceed to prosecution.