What to do if you’ve been reported for tax evasion in the UK?

Many individuals have tried to optimise the way they pay their taxes, especially those who run a business or are self-employed. While there are clear legal structures that allow you to do so, whether by writing off certain expenses or paying yourself through certain structures, fiddling with your taxes can in some cases become a serious legal offence.

If you believe that you may be guilty of tax evasion, and that someone might have reported you for doing so, you’ll likely find yourself in a highly stressful situation. Here, we take a quick look at what you should do, what you might be charged with, and the potential legal ramifications should you be found guilty.

 

What should I do?

If you suspect that you’ve been reported for tax evasion, or you have reason to believe that you might imminently face charges or an investigation, you need to reach out to a qualified criminal defence solicitor immediately.

No matter which kind of tax evasion you’re being investigated for, if the state decides it’s in the public interest to charge and prosecute, you will need to get working on a legal defence as soon as possible. 

These kinds of cases can end up becoming highly complex, and the more time that you and your solicitor have to work on it together, the better.

 

What will I be charged with?

Tax evasion is not a specific criminal offence, but rather refers to a range of different offences, the most important of which are detailed below. It’s important to note that this is not an exhaustive list of the different acts that can be used to charge these kinds of crimes. It’s a highly complex area of the law that requires the attention of a solicitor who has experience dealing with similar crimes to the one you have been accused of or reported for.

Cheating the public revenue

Cheating the public revenue is perhaps the most serious common law offence that you can be charged with associated with tax evasion. Normally reserved for cases where a large amount has been defrauded, as we’ll see later on, it’s the offence that carried with it the highest sentence maximum.

Fraud

Where individuals or corporate bodies have consciously lied to HMRC, in order to bring about personal gain, it’s possible that they might be charged with fraud under the Fraud Act 2006. This is an act designed to deal with fraud more generally, rather than revenue fraud specifically, but it can still be used with these kinds of crimes. 

VAT fraud

If the tax that you’ve been reported for evading is value added tax (or VAT), it’s possible that you’ll be charged under section 72 of the Value Added Tax Act 1994.

Online tax evasion

While traditionally, tax evasion has been carried out by retailers and businesses with material, brick-and-mortar premises, online tax evasion is now becoming increasingly common. Online tax evasion typically refers to online retailers, potentially based overseas but selling their products or services in the UK, without paying the appropriate duty payments or VAT. 

As a result, platforms with a larger presence such as Amazon and eBay are increasingly being policed to look for tax-evading sellers. In addition to this kind of policing, there are also a number of new laws and regulations being introduced. 

As these rules are changing at such a rapid rate, if you’re an online seller it’s imperative that you remain informed so that you don’t inadvertently fall foul of the law.

 

Sentencing for tax evasion 

The sentencing guidelines for those found guilty of tax evasion are clear evidence of how seriously it’s treated by the law in this country. At the most extreme end of the scale, the guidelines state that those found guilty of cheating the public revenue can face up to life imprisonment, with an offence range of between 3 and 17 years.

Those found guilty of fraud under the Fraud Act 2006 can face a maximum of 10 years in prison, with an offence range of between a low-level community order and 8 years in prison. 

 

Impacting factors on sentencing

There are two main factors that will go into determining your sentence – culpability and harm.

Harm

With most crimes of a financial nature, tax evasion included, the harm category that you’ll be placed in will be determined by the financial component of your crime – in this case, how much money you defrauded HMRC of. 

At the most serious end of the scale, cases involving a loss of over £50 million will be placed in category 1. At the other end of the scale, cases involving a loss of less than £20,000 will be placed in category 7. 

Capability

Culpability will generally be used to determine how involved you were in the act of defrauding HMRC. Those who play a leading role in a broader conspiracy, abusing a position of power to put in place a complex scheme over a long period of time, will likely be placed in the high culpability bracket.

On the other hand, those who are involved through coercion or exploitation, and who have limited awareness of the criminal nature of their actions will likely be placed in the lesser culpability bracket.

 

Seeking legal assistance

Tax evasion poses an existential threat to the ongoing functioning of the government, and as a result, it’s a crime that they take incredibly seriously. While HMRC’s resources are stretched at the moment, if you’re reported for tax evasion, there’s a strong chance that you’ll be investigated. 

If you suspect that you’ve been reported, or if you have reason to believe that you’re currently under investigation, it’s imperative that you seek legal assistance. Your criminal defence solicitor will be able to:

• Provide you with legal advice before and during any interviews under caution you need to attend
• Help you to develop a watertight defence, arranging for your representation in court if needed
• Ensure that you’re treated by the law in a just manner at all times
• Take you through the appeals process should you and your legal team believe a better result is possible.

This should have driven home just how important tax evasion is treated by the legal system in the UK. If you suspect that you’ve been reported, it’s imperative that you seek legal advice as soon as possible.