Average Prison Sentence for Tax Fraud on the Rise in the UK

Analysis conducted by Pinsent Masons released last month showed that prison sentences for tax fraud in the UK have risen significantly in recent years. Tax fraud refers to a variety of tax-related offenses, including evasion of tax, VAT and excise duty, as well as customs duty fraud. This includes both non-payment of tax and underpayment of tax by either businesses or individuals. Four years ago, the average prison sentence for tax fraud was three years and three months. Today, however, it is just over four years.

The increase in prison sentences comes at a time when the British government faces mounting political pressure to categorize tax fraud as among the more serious offenses. In addition, the government is facing public scrutiny regarding its treatment of tax amid claims that major companies – including Google, Starbucks, Facebook, and Amazon – have avoided paying tax, thereby cheating public coffers out of much-needed revenues.

“HMRC has come under growing political pressure in recent years to prove to the public that it has a workable strategy in place to stamp out evasion. As a result, it has become more dogged in its approach to sentencing,” explained Olga Tocewicz, a senior associate at Pinsent Masons. “Both individuals and businesses are facing stringent additional new laws for offshore tax evasion later this year, and should anyone be caught out by these rules, they may face an even lengthier sentence.”

In addition to longer prison sentences, the government is successfully prosecuting a bigger number of tax evasion cases. With stricter liability legislation slated to come into force around offshore tax evasion specifically in the autumn, it is expected that the number of prosecutions of tax evasions cases – as well as the severity of penalties – could increase.