Tax Evasion

Tax evasion is illegal, in contrast to tax avoidance, which exploits the tax rules without technically breaking them. HMRC's guidance on the criminal facilitation offence explains that for the facilitation of tax evasion to be a criminal act, a person must have deliberately and dishonestly helped another person to evade tax; this does not include the accidental, ignorant or negligent facilitation of tax evasion, underlining that dishonesty is the essential element separating evasion from mere error or legitimate avoidance.

Beyond the dishonesty of the individual evader, the Criminal Finances Act 2017 created corporate offences aimed at organisations that fail to stop their staff or agents from facilitating tax evasion. Under Part 3 of that Act, a company or partnership that fails to prevent a representative from criminally facilitating UK tax evasion may be guilty of a corporate failure to prevent offence, even where the organisation itself did not intend or know about the evasion, unless it had reasonable prevention procedures in place. HMRC also operates a facility allowing organisations to self-report such failures on behalf of a company or partnership where they are its authorised representative.

The public can also report suspected tax evasion or avoidance directly to HMRC, which investigates matters including hidden or moved assets, cash or crypto, and tax fraud involving businesses on the high street; a reward may be available where a report of serious tax avoidance or evasion leads to HMRC recovering a substantial amount of tax.