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HMRC ‘slow to recover criminal proceeds’

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Her Majesty’s Inspectorate of Constabulary (HMIC) has published a report on the inspection of HMRC’s performance in addressing the recovery of proceeds from crime involving tax and duty evasion and benefit fraud.

The report’s main conclusion is that progress has been slow and that HMRC has failed to implement many of HMIC’s recommendations (contained in its 2013 report). The report points out in particular that although HMRC has developed an action plan, there is a lack of effective governance to ensure that sufficient priority and focus is given to these issues.

The report recognises however that HMRC’s recent focus on criminal finances is commendable.

In related news, the Home Affairs Committee published its report on tobacco smuggling on 14 June. The committee found that HMRC has not fined any UK tobacco manufacturer for oversupplying products or failing to control its supply chain, and has issued only one statutory warning letter threatening a fine.

It suggested that HMRC should publish a clear set of criteria setting out the circumstances in which it would impose a fine and that an immediate review should be taken of all historic and ongoing cases against these criteria.

The committee also found that over the last three years the numbers of arrests, prosecutions and convictions for organised crime cases involving tobacco have all fallen. Civil penalties were also substantially below target in both 2011/12 and 2012/13.

According to a report published by the European Union on 16 June, around 816m cigarettes and 240,000 litres of alcohol were seized by EU customs over a ten month period in 2013 – representing a 105% increase compared to 2012. The report details the planning, implementation and results of ‘DISMANTLE’, a targeted customs operation to tackle the risk of smuggling and fraud in excise goods.

Algirdas Šemeta, commissioner for customs and anti-fraud, said: ‘Customs do not only safeguard the EU’s financial interests; they also protect our citizens and legitimate businesses. DISMANTLE shows the great results we can achieve in combating smuggling and fraud by working in cooperation, identifying common risks and sharing information.’

Finally, the UK’s Supreme Court has ruled in Eastenders Cash and Carry [2014] UKSC 34 that HMRC can detain goods pending their forfeiture. This is on the basis that detention is an ancillary right to the right of inspection.