In the last year, the Fraud Investigation Service retrieved £2.36bn through civil investigations and a further £1.07bn through criminal investigations. Criminal investigations tend to be more time and cost intensive, whereas civil investigations are generally more cost effective.

The Fraud Investigation Service was created in 2015 to undertake investigations into avoidance and evasion across all taxes HMRC is responsible for.

HMRC undertook 1,135 prosecutions in 2016/17. Examples of high profile criminal investigations carried out by Fraud Investigation Service include:

• The arrest of six alleged fraudsters for their involvement in an alleged £440m alcohol tax fraud and money laundering racket;
• The sentencing of two men who ran a Truro-based financial exchange firm, Omnis Capital FX, as a front for a £40m money laundering operation;
• The sentencing of a car dealer who fraudulently claimed back £2m-worth of tax on car sales between 2009-2011; and
• Sentencing of the director of a parking firm who defrauded HMRC of £499k of PAYE and NIC between 2008 and 2015.

Additionally, in March 2017, it was reported that the Fraud Investigation Service had started an investigation – in partnership with authorities in the Netherlands, Australia, Germany and France – into an unnamed ‘global financial institution’ on the grounds of suspected tax fraud.

Paul Noble, head of tax investigations at Pinsent Masons, said: ’To be seen to be cracking down on tax fraud is a major priority for HMRC. Pooling intelligence and know how across HMRC has sometimes been hard to do. But centralising a number of independent specialist teams has made that information sharing more likely to happen.

‘The OECD estimates that tax avoidance and evasion costs the global economy over $200bn a year. It is a major issue and the Fraud Investigation Service is dedicated to tackling it – working, where necessary, with international authorities to do so.

‘A key – albeit secondary – role of the Fraud Investigation Service has been to send out a very clear message that tax fraud will not be tolerated through the media coverage of the criminal cases it has worked on. This serves as a warning of the consequences fraudsters will face. That deterrence factor is really important when you are dealing with what can sometimes be very organised gangs of tax fraudsters and more unorganised but equally serious circumstances.’

Report by Amy Austin