Tax crime prosecuted 23 times less than benefits fraud

Despite this, tax fraud cost the Treasury an estimated £20bn in 2018/19, against the £2.2bn cost of benefits fraud in the same period

A new report from TaxWatch has revealed the “huge disparity” between the way benefits crime and tax crime is treated, with the UK prosecuting 23 times more people for benefits offences than tax offences. 

Its latest report, entitled ‘Equality before the law? HMRC’s use of criminal prosecutions for tax fraud and other revenue crimes. A comparison with benefits fraud’, reported these figures despite the fact the value of tax fraud is nine times higher than benefits fraud.

Tax fraud cost the Treasury an estimated £20bn in 2018/19, against the £2.2bn cost of benefits fraud in the same period. 

According to the report, the DWP also employs 3.5x more staff in compliance than HMRC, though the HMRC has improved its focus on serious and complex tax crime, with the number of investigations in this area increasing from 50 to 400 between 2015 and 2020.

Nonetheless, over the past 11 years there have been 86,000 criminal prosecutions for benefits crimes, compared to 3,665 prosecutions for tax crime. 

In the same period, 8.5x more suspended or immediate custodial sentences have been handed down for benefits crime against tax crime.

In addition, the number of criminal prosecutions relating to tax crime of all kinds has plummeted 39% since 2015.

Despite these figures, the HMRC reportedly told TaxWatch that since the launch of its Fraud Investigation Service in 2016, it has launched over 76,000 civil cases and more than 4,000 criminal investigations.

According to the latest DWP annual report, the agency concluded 46,000 fraud investigations and referred 2,000 cases for criminal prosecution in one year.

In its latest report, TaxWatch said: “We find that on the basis of the government’s own figures, tax fraud costs the Treasury nine times the amount lost to benefits fraud.

“Despite this, the government allocates significantly more resources (relative to the tax and benefits gaps) to compliance in the benefits system than in the tax system.” 

It added: “This inequality of arms, combined with a stricter policy on when to refer cases for prosecution practised by the DWP, leads to a vast disparity between the amount of benefits crime prosecuted as a criminal offence when compared to tax offences.

“This disparity demonstrates that the law is not being applied equally with regards to crimes committed against the public purse.”

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