What is the sentencing for tax fraud in the UK?

Tax fraud – sometimes also referred to as tax evasion – is an incredibly serious criminal offence. As the wider implications of tax fraud literally determine the ability of the country to fund itself, the government throws substantial resources at the issue, meaning that investigations and convictions are quite common.

Due to the complex nature of tax fraud investigations, it can often be relatively timely and resource-intensive to develop an effective defence. The earlier you reach out to a qualified criminal defence solicitor, the more time you and your legal team will have to get to work on the best defence possible.

 

The legal definition of fraud

Fraud as a criminal offence is primarily dealt with under The Fraud Act 2006. According to the act, fraud is considered to be a situation in which someone intentionally lies, in order to either bring about loss to another or gain to themself.

Mens rea (or put more simply, intentionality) is an important component when it comes to fraud convictions. It is normally necessary that the prosecution can clearly prove that the person intentionally lied or otherwise misrepresented reality, in order to secure a conviction.

Tax fraud

Tax fraud is a specific kind of fraud, whereby you defraud the taxing body – in the UK, this being HMRC. Tax fraud can be dealt with under the Fraud Act 2006, but in some cases, it can also be dealt with using other, common law offences that we explore later on.

 

Examples of tax fraud

Tax fraud can be carried out in a number of different ways.

• VAT fraud: a common example of tax fraud is where a business charges VAT to their customers, but then does not pay that money to HMRC. This is a particularly serious instance of fraud, as it potentially involves defrauding both the government and whichever clients are fraudulently charged VAT. 
• Failure to declare earnings: another straightforward way that tax fraud is committed is when individuals or businesses falsify the amount of money they earned in a given year. As a result of deliberately understating the amount that’s been earned, they can then pay less tax than they are in fact legally obliged to pay.

 

Sentencing for tax fraud

Due to the large number of different laws that tax fraud cases can be charged using, how long your sentence can be will depend to a certain extent on which act or element of common law you’re charged under.

The sentencing guidelines on the matter are a good place to seek further clarification. They state that if you’re prosecuted under the Fraud Act 2006, you can face up to 10 years’ custody, with an offence range of between a low-level community order and 8 years’ custody. 

If, however, you’re charged under the common law offence of Fraud: Cheating the public revenue, you may face up to life imprisonment, with an offence range of between 3 and 17 years’ imprisonment.

 

Other legal repercussions

As with any other criminal conviction, if you are found guilty of tax fraud, it is likely that it will end up on your criminal record. 

This could negatively impact the kinds of jobs that you’re able to apply for in the future, effectively banning you from certain positions in law, healthcare and education. It could also mean that you have issues entering certain foreign countries with strict entry requirements, such as America.

 

Impacting factors on sentencing

The exact sentence that you might be facing will depend on a range of factors, some of which we take a look at below.

Culpability

When assessing the severity of your instance of tax fraud, one of the things the court will try to gauge is your level of culpability.

In general, you will be considered more culpable if you play a leading role as part of a broader group conspiracy to carry out tax fraud, where you carry out that activity over a long period of time in a sophisticated, well-planned manner.

You will generally be considered to be less culpable if you were intimidated or otherwise coerced into involvement, were not motivated by your own personal gain, and had limited understanding of what you considered to be a one-off, opportunistic act with little or even no prior planning.

Harm

Another important factor that will determine your sentence is harm. In tax fraud cases, this is relatively easy to determine – it is measured by the amount of money that you either intended to gain or cause another party (in this case HMRC) to lose.

At the upper end of that scale will be cases where over £50 million has been defrauded – these cases are considered to be category 1 cases. At the other end of the scale are cases in which under £20,000 has been defrauded with a starting point of £12,500 – this will typically be considered a category 7 case. 

Where the amount that has been defrauded is above around £2 million, the defendant can in some instances be charged under the common law offence of Cheating the revenue. Due to its higher maximum sentencing guideline, this offence can result in a far higher custodial sentence of up to life imprisonment.

 

Seeking legal assistance

Tax fraud cases are incredibly serious. The government may choose to throw substantial resources into the investigation, including not just the police but also the Serious Fraud Office. As a result, it’s imperative that your legal team has extensive experience when it comes to developing tax fraud related defences. Your criminal defence solicitor will be able to:

• Advise you both before and during any interviews under caution you need to attend, whether with the police or another investigatory body
• Help you to develop the best defence possible given your situation, arranging for your representation in court if necessary
• Ensure that the law is applied in a just and fair manner at all times
• Help take you through the appeals process, should it be necessary.

It’s difficult to overstate how complex tax fraud cases can become. The more time you and your team have to work on a defence, the higher your chances will be of relative success.