Middle classes targeted for tax evasion
HM Revenue & Customs has been accused of targeting low-hanging fruit in its pursuit of tax evaders, focusing on professionals such as lawyers and dentists and on buy-to-let landlords.
According to a report from international law firm Pinsent Masons, HMRC successfully prosecuted 617 people for tax evasion during 2012-13, up from 302 in 2011-12. The rise follows a promise from the Treasury three years ago that it intended to quintuple the annual number of tax prosecutions.
"It was a very low number last year, but the intention is to massively ramp it up in coming years," says a Pinsent Masons spokeswoman. "It's quite a significant increase, designed to send a deterrent message, and it's going to get massively higher."
And, according to the law firm, HMRC is boosting the figures by targeting small-time tax evaders that it might once have regarded as beneath its attention.
"These aren't necessarily individuals who owe hundreds of thousands of pounds but people like doctors, dentists, lawyers, construction contractors and restaurant owners who have not declared amounts in the tens of thousands," says partner Jason Collins.
"Those in a position of trust or responsibility, such as lawyers, medical practitioners or business or financial consultants, are increasingly in HMRC's line of fire, and we are also seeing an increase in buy-to-let investors falling foul of the system."
Last year, HMRC started contacting people it believed were selling items on sites such as Amazon and eBay as a business, and warning them that they might face penalties. It's also targeted professionals before, saying on its website that it is particularly interested in cases where an individual holds a position of trust or responsibility.
However, it denies that it is now targeting the particular groups identified by Pinsent Masons.
"HMRC ensure everyone pays the tax that is due, and clamps down on those who try to cheat the system - regardless of their occupation. HMRC has been tasked to increase prosecutions five-fold, and has been given almost £1 billion to ensure that people play by the rules. HMRC is successful in over 90 percent of prosecutions," says a spokesman.
"HMRC campaigns - such as those for plumbers, doctors and dentists and those with offshore accounts - gave people the chance to come forward and put things right on their own accord before HMRC took action. This approach has raised over £600 million so far."
Richard Murphy of campaign group Tax Evasion UK says that while the number of successful prosecutions is tiny, this is largely because HMRC has traditionally settled cases without prosecution, collecting civil penalties instead. And, he says, "I think to target opinion formers and those calculatingly omitting investment income from tax returns an overdue development. Tax evasion has, for too long, been seen as a socially acceptable crime."
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