Cunninghams Solicitors

What is tax evasion and what happens if you are accused

Tax evasion is the deliberate, dishonest attempt to not pay the tax owed to HMRC. It covers evasion of income tax or VAT, excise duty, and custom duty frauds.

Tax evasion is illegal, with serious consequences for those who are found guilty, from financial penalties to criminal conviction and imprisonment.

Examples of tax evasion

There are a number of ways that you can commit tax evasion:

– Cash or cryptocurrency transactions
The avoidance of a traceable record of a trading transaction (usually by taking a ‘cash in hand’ payment) in order to avoid paying tax on income.

– Non-reporting of taxable trading income
The intentional hiding of trading revenues, or failing to file tax returns.

– Tax-allowable expenditure claim
Falsely claiming for expenses is tax fraud and evasion.

– Missing trader fraud/carousel fraud
The process of importing goods VAT-free, selling them to customers with added VAT, then failing to report VAT charged to HMRC.

– Imported goods
Failing to declare imported goods or undervaluing imported goods in order to evade import duties is tax evasion.

– Identity theft
When a person assumes the identity of someone else in order to carry out taxable transactions in their name.

– Tax avoidance schemes
These are structured purchasing systems, the aim of which is to save money on tax. These schemes may result in the tax-avoider being found guilty of tax evasion by HMRC.

How do you know if you are being investigated for tax evasion?

HMRC will notify you by letter if they are investigating you for tax evasion. You cannot appeal against an investigation. If you receive a letter informing you that you are being investigated for tax evasion, it is wise to instruct a fraud defence solicitor who specialises in tax fraud and HMRC.

Having a fraud defence solicitor by your side from the start can have a significant impact on the outcome of your tax evasion case. Your defence solicitor can help you achieve an amenable settlement, or help you appeal once your penalty has been issued.

In order for a person to be found guilty of tax evasion, the HMRC must demonstrate that the taxpayer knowingly withheld information with the aim of avoiding tax payments.

What are the consequences of tax evasion?

Tax evasion is a crime and carries serious penalties; those found guilty of tax evasion could face fines and even prison sentences. 

Over a period of 3 years, HMRC prosecuted 2,343 individuals– including high-profile barristers, accountants and lawyers- resulting in a collective total of 2,500 years in custodial sentences. The HMRC uses civil procedures as well as criminal procedures, which allows them to increase both the volume of cases that they can pursue and the revenues that they can secure. 

How a defence solicitor can help

As discussed above, the way in which the initial stages of an investigation are handled can have a major impact on the outcome of your case. This is why it is imperative that you consult an experienced tax solicitor as soon as possible if you find yourself under investigation by HMRC for non-payment or underpayment of tax.

Operating nationwide, Cunninghams are a leading firm in fraud work according to the Legal 500 and Chambers and Partners guide to the UK Legal Profession. Cunninghams have been specialising in fraud, HMRC investigations, and tax evasion cases for over 30 years, resulting in an enviable network of experts, forensic accountants, QC’s and senior barristers to draw upon when tailoring your defence team.

Working with your existing accountant, or employing the services of specialist accountants, Cunningham’s aim is to draw a halt to any criminal proceedings as soon as possible and to defend your position vigorously should HMRC persist.

If you are being investigated or have been charged with VAT fraud it is important not to delay. Contact Cunninghams