Businesses wake up to a third more dawn tax raids

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Aug 09, 2017
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HM Revenue & Customs will soon have new powers to target those who fail to prevent the facilitation of tax evasion


Dawn raids on British businesses have leapt by a third over the last five years as tax authorities have cracked down on evasion, lawyers claimed yesterday.

They also warned that the rising number of raids was not likely to subside as HM Revenue & Customs gear up to take advantage of new criminal offences. The taxman launched 669 dawn raids on corporations in 2016-17 compared with 499 in 2011-12, according to figures obtained by a City of London law firm. 

Lawyers pointed out that the corporate criminal offence of failure to prevent the facilitation of tax evasion comes into force on September 30, meaning that the authorities will have enhanced powers to tackle tax evasion. For example, they will be able to prosecute companies and partnerships that fail to prevent staff from engaging in or encouraging tax evasion. That is likely to result in even more dawn raids, predict tax specialist lawyers.

The new offence means HMRC is likely to investigate how businesses and their employees have assisted or encouraged non-compliance with tax rules by their business partners, customers, contractors and suppliers. 

“HMRC have shown they are not afraid to come down hard on large corporates they suspect of tax evasion,” said Jason Collins, a partner at Pinsent Masons, the law firm that analysed the figures. Collins warned that banks and professional services companies were at a particularly high risk of their staff or agents being involved in tax evasion, owing to the large amount of capital they handle.

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