HMRC has did not high quality a single ‘enabler’ of offshore tax fraud in 5 years

The UK’s tax authority has not fined a single “enabler” of offshore tax evasion or noncompliance in 5 years, regardless of landmark powers to impose big fines.

Tory ministers claimed new legal guidelines launched in 2017 allowed HM Income and Customs (HMRC) to pursue accountants, legal professionals and bankers who facilitate offshore tax evasion would “create a stage enjoying area”, with potential fines of a number of hundreds of thousands of kilos.

New figures disclosed beneath freedom of data legal guidelines to the Bureau of Investigative Journalism reveal nobody has been fined within the final 5 years beneath the powers.

“New HMRC powers are pointless if the powers aren’t then used,” mentioned Dan Neidle, founding father of the unbiased thinktank Tax Coverage Associates and former head of tax at international regulation agency Clifford Probability.

Tax evasion and avoidance are key components within the forthcoming election. Each main events say they hope to lift billions of kilos from clamping down, counting on the money raised to pay for manifesto pledges.

Tory ministers say they might use £1bn to assist fund the party’s ­proposed national service scheme, whereas Labour would use it to chop NHS ready lists and introduce free ­primary school breakfast clubs.

The UK “tax hole” – the distinction between tax paid and owed – now stands at £36bn for the yr 2021-22, the newest determine accessible. Labour has accused the Tories of weakening “the deterrent impact of prosecutions and penalties”.

HMRC defines an enabler as “any one that knowingly helps their ­shopper to keep away from or evade tax”. Concentrating on them, and never simply the ­taxpayer, grew to become a key pillar of HMRC’s technique.

The offshore enabler penalty was launched in 2017, alongside a variety of recent powers to make it simpler to punish perpetrators. The penalty might embrace a £3,000 high quality or 100% of the quantity of tax that was dodged, whichever was bigger.

HM Treasury boasted on the time that the UK was one of many first nations on this planet to introduce this energy. It mentioned: “Whereas tax evasion has at all times been unlawful, this regulation will imply HMRC can, for the primary time, cost civil penalties on the facilitators of the tax evasion who present planning, recommendation or different skilled providers or bodily transfer funds offshore.”

Michelle Sloane, a tax disputes companion at regulation agency Reynolds Porter Chamberlain, mentioned: “Enablers have been and nonetheless are a giant focus for HMRC. However these figures present their rhetoric on tackling enablers … is clearly not being adopted by with motion.”

In its annual report final yr, HMRC mentioned it had raised a further £34bn by tackling tax avoidance, evasion and different noncompliance. The service has been criticised for failing to correctly deploy new legal guidelines to crack down on tax avoidance.

The Observer has reported how HMRC has did not cost a single firm beneath new legal guidelines handed to crack down on corporate tax evasion. Figures printed final yr additionally revealed the variety of HMRC investigations that lead to prosecutions had fallen by two-thirds in since 2018.

Stephen Daly, a tax tutorial at King’s School London, known as the dearth of any penalties for offshore enablers “weird”. He mentioned: “Why would the federal government need to introduce such an influence solely to go away it sitting idly by?”

The findings compound stress on HMRC after revelations that the authority doesn’t know the way a lot is misplaced to offshore tax dodging annually. HMRC estimates that it collects 95% of all of the tax owed within the UK.

Figures HMRC disclosed to Tax Coverage Associates in 2021 revealed that UK taxpayers held £850bn in international accounts in 2019, of which £570bn was in tax havens.

Nonetheless, HMRC mentioned in a freedom of data response to the thinktank that it had not “produced or obtained any estimates” on how a lot is being misplaced to illegal offshore schemes.

In June 2022, Lucy Frazer, then monetary secretary to the Treasury, mentioned HMRC would produce information on the “offshore tax hole” in 2023, however it has nonetheless not been printed.

An HMRC spokesperson mentioned: “Now we have a robust monitor report in tackling offshore noncompliance. Because the launch of our ‘no protected havens’ technique in 2019, we have now secured nearly £700m from offshore initiatives.”