Out-Law / Your Daily Need-To-Know

Average prison sentence for tax evasion over two and a half years

Out-Law News | 21 Oct 2019 | 9:28 am | 1 min. read

The average prison sentence for tax evasion increased again last year, reaching two years and seven months, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.

Tax disputes expert Steven Porter of Pinsent Masons said that HM Revenue and Customs (HMRC) was sending a "clear message" that it would not tolerate tax evasion.

"HMRC is using its full range of powers to claw back the money that it is owed. Making an example of tax evaders by pushing for longer sentencing lengths is a part of its method to deter future tax cheats," he said.

"HMRC has been pushing for longer custodial sentences in the hope that it will create a deterrent effect for individuals who are considering tax evasion. HMRC has come under pressure to take a hard line against tax evasion following a 2016 parliamentary approach which concluded its approach was not severe enough," he said.

Custodial sentences handed down for tax evasion in the year to 31 March 2019 were 10% higher than in 2017-18, when the average sentence length was two years and five months. Tax evasion is the deliberate non-payment or underpayment of tax by individuals or businesses that is legally due to HMRC.

The maximum penalty for income tax evasion in the most serious cases is a seven year prison sentence or an unlimited fine. Porter said that HMRC, together with the Crown Prosecution Service (CPS), have increasingly been pushing for instances of tax evasion to be considered in more serious categories of offence, and so carry a higher penalty.

During a prosecution, judges sentence offenders using a set of pre-determined categories, which are based on the level of the offender's culpability and the loss to HMRC. Prosecutors can argue that a case belongs in a higher category, and so must carry a longer sentence, based on factors such as whether the offender abused a position of power, played a leading role in coordinating the offence for their own personal gain or deliberately concealed information when being investigated.

Some of the significant sentences handed down for tax evasion offences last year included a combined 46 year prison term for a Berkshire-based organised crime gang of nine, who evaded up to £34 million in tax on the sale of illicit alcohol and then laundered the proceeds. In Kent, an organised crime gang who illegally imported cigarettes and then evaded over £600,000 in VAT were sentenced for over 16 years.

In another case, the director of a call centre business and his accountant were sentenced to a total of seven and a half years in prison after evading £2.3m worth of income tax, PAYE and VAT.