Doubling the maximum prison term for the most egregious examples of tax fraud
Updated 22 November 2023
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This publication is available at https://www.gov.uk/government/publications/increasing-the-maximum-prison-term-for-tax-fraud/doubling-the-maximum-prison-term-for-the-most-egregious-examples-of-tax-fraud
Who is likely to be affected
Individuals convicted of the most egregious examples of tax fraud.
General description of the measure
The government will double the maximum prison term from 7 to 14 years for individuals convicted of the most egregious examples of tax fraud.
Policy objective
This measure demonstrates the government’s intent to crack down on tax fraud and deter criminal actions, which reduce the amount of money available to fund vital public services. This is part of a wider package of measures seeking to discourage egregious tax behaviour.
Background to the measure
As announced at Spring Budget 2023, the government will amend the maximum sentences that can be given to individuals convicted of serious tax fraud from 7 to 14 years.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Finance Bill 2023-24 for all taxes and duties administered by HMRC, except for the fraudulent evasion of National Insurance contributions (NICs) which will be amended through a future NICs Bill.
Current law
The table below lists the offences where the maximum sentence for tax fraud is seven years.
| Offence | Provision |
|---|---|
| Fraudulent evasion of agricultural levy | Section 68A Customs and Excise Management Act 1979 |
| Fraudulent evasion of duty payable on goods | Section 170(1) and (2) Customs and Excise Management Act 1979 |
| Offence of taking preparatory steps for evasion of excise duty | Section 170B Customs and Excise Management Act 1979 |
| Fraudulent evasion of VAT | Section 72(1) Value Added Tax Act 1994 |
| Fraudulent evasion of income tax | Section 106A Taxes Management Act 1970 |
| Fraudulent evasion of machine games duty | Paragraph 37 of schedule 24 to the Finance Act 2012 |
| Fraudulent evasion of air passenger duty | Section 41 Finance Act 1994 |
| Fraudulent evasion of insurance premium tax | Schedule 7, paragraphs 9 and 10 Finance Act 1994 |
| Fraudulent evasion of landfill tax | Schedule 5, paragraphs 15 and 16 Finance Act 1996 |
| Fraudulent evasion of aggregates levy | Section 28 and schedule 6, paragraph 1 of Finance Act 2001 |
| Fraudulent evasion of climate change levy | Schedule 6, paragraph 92 Finance Act 2000 |
| Fraudulent evasion of stamp duty land tax | Section 95 of Finance Act 2003 |
| Fraudulent evasion of general betting duty, pool betting duty or remote gaming duty | Section 174 of Finance Act 2014 |
| Fraudulent evasion of lottery duty | Section 31(1) Finance Act 1993 |
| Fraudulent evasion of bingo duty | Schedule 3, paragraph 16(1) Betting and Gaming Duties Act 1981 |
| Fraudulent evasion of gaming duty | Schedule 1, paragraph 12 Finance Act 1997 |
| Fraudulent evasion of soft drinks industry levy | Section 50 Finance Act 2017 |
| Improper importation of goods with intent to defraud | Section 50 Customs and Excise Management Act 1979 |
| Goods of which entry is required are shipped for exportation before entry has been delivered and accepted, where the shipping or making waterborne is done with fraudulent intent | Section 53(9) Customs and Excise Management Act 1979 |
| Goods taken onboard a ship with fraudulent intent | Section 63(6) Customs and Excise Management Act 1979 |
| Exportation of prohibited/restricted goods with intent to evade that prohibition/restriction | Section 68 Customs and Excise Management Act 1979 |
| Taking, removing, loading or concealing any mentioned goods with intent to defraud of any duty | Section 100 Customs and Excise Management Act 1979 |
| With intent to defraud a person obtains any amount by way of drawback, allowance, remission or repayment of, or any rebate from, any duty | Section 136 Customs and Excise Management Act 1979 |
| Imported goods are removed by a person with intent to defraud | Section 159 Customs and Excise Management Act 1979 |
| Restrictions on the use of duty-free oil | Section 10(7) Hydrocarbon Oil Duties Act 1979 |
| Use of heavy oil in contravention of certain restrictions | Section 13(5) Hydrocarbon Oil Duties Act 1979 |
| Use of rebated kerosene in contravention of certain restrictions | Section 13AB(7) Hydrocarbon Oil Duties Act 1979 |
| Use of light oil in contravention of certain restrictions | Section 14(8) Hydrocarbon Oil Duties Act 1979 |
| Use of biodiesel or bioblend in contravention of certain restrictions | Section 14D(5) Hydrocarbon Oil Duties Act 1979 |
| Use of restricted fuel for private pleasure craft in contravention of certain restrictions | Section 14F(3) Hydrocarbon Oil Duties Act 1979 |
| Mixing of aqua methanol with other substances | Section 20AAC(4) Hydrocarbon Oil Duties Act 1979 |
| Use of marked oil in contravention of certain restrictions | Section 24A(6) Hydrocarbon Oil Duties Act 1979 |
| Relieved goods used in breach of condition with intent to evade the payment of tax/duty | Section 13C(4) Customs and Excise Duties (General Reliefs) Act 1979 |
| Fraudulent evasion of plastic packaging tax | Section 77 Finance Act 2021 |
| Plastic packaging tax — misstatements | Section 78 Finance Act 2021 |
| Plastic packaging tax — conduct involving evasion or misstatements | Section 79 Finance Act 2021 |
| Improper importation of goods enhancements for forgery & counterfeiting and nuclear material | Section 50 (5AA) (5C) Customs and Excise Management Act 1979 |
| Exportation of prohibited or restricted goods enhancements for forgery & counterfeiting and nuclear material | Section 68 (4AA) (4B) Customs and Excise Management Act 1979 |
| Fraudulent evasion of duty enhancements for forgery & counterfeiting and nuclear material | Section 170 (4AA) (4C) Customs and Excise Management Act 1979 |
Proposed revisions
The sentences above, which currently carrying a maximum sentence of 7 years, will be increased to 14 years.
The offence of counterfeiting contained within the above table under CEMA 1979 Sections 50, 68 and 170 currently increases the maximum penalty from 7 years to 10 years. This will also move to 14 years.
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts on those in groups sharing protected characteristics.
Impact on business including civil society organisations
There is no expected impact on businesses and civil society organisations as this measure only affects individuals.
Operational impact (£ million) (HMRC or other)
There are no operational and delivery impacts with this change, as the measure increases existing penalties which are currently in operation. There may be increased prison costs associated with longer sentencing if imposed by Sentencing Council.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through monitoring of the length and number of prison sentences given to individuals charged with the most egregious examples of tax fraud. None of the evaluation principles apply.
Further advice
If you have any questions about this change, please contact Ben Reed on Telephone:03000 547236 or email: [email protected].