Study Calls for Tax Evasion as Corruption to Be Recognised in Crackdown on Financial Crime

Researchers examining global financial crime enforcement argue that recognising tax evasion as corruption could help governments hold financial criminals more effectively accountable. Researchers argue that classifying tax evasion alongside corruption offences could strengthen enforcement tools and improve cross-border cooperation against illicit financial flows.

The study, conducted by Professor Umut Turksen of the University of Exeter and Dr Alison Lui of Liverpool John Moores University and published in the Criminal Law Review, examines how countries prosecute tax evasion and concludes that treating it solely as a tax offence limits authorities’ ability to pursue serious offenders. The research highlights how the UK’s legal framework for tax crime is fragmented across multiple statutes and common law offences, which can complicate enforcement and accountability for corporate tax fraud and related corruption offences. The findings come as UK regulators, including HM Revenue & Customs (HMRC), continue efforts to close the tax gap and strengthen action against financial crime.

Why Treating Tax Evasion as Corruption Matters

The debate goes beyond academic theory. Tax evasion reduces government revenues, distorts markets, and undermines trust in the tax system. In the UK, HMRC initially estimated the tax gap — the difference between tax owed and tax collected — at £39.8 billion (4.8% of total theoretical tax liabilities) for the 2022–23 tax year, a figure later revised upwards to £46.4 billion (5.6%) in 2025

If tax evasion were more widely recognised as a corruption offence, enforcement agencies could potentially apply stronger investigative powers, including asset recovery tools and anti-corruption frameworks already used in other financial crime cases.

For businesses operating legally, stronger enforcement may also help create a more level competitive environment.

Key Points

• Researchers argue tax evasion should be classified alongside corruption offences.
• The UK tax gap was estimated at  £46.4 billion in 2025, according to HMRC.
• Criminal tax evasion in the UK is prosecuted under legislation including the Fraud Act 2006 and Taxes Management Act 1970.
• The Criminal Finances Act 2017 introduced corporate offences for failure to prevent tax evasion.
• Stronger classification could expand international cooperation and enforcement.

What Has Happened

The study examines how financial crime is prosecuted across jurisdictions and concludes that tax evasion is often treated less seriously than other forms of economic crime.

Researchers argue this distinction creates enforcement gaps. In many legal systems, corruption offences trigger broader investigative powers, stronger penalties, and more extensive cross-border cooperation.

By comparison, tax evasion is sometimes handled primarily through tax law, which can limit investigative tools or reduce deterrence.

The study therefore suggests governments should recognise tax evasion as a form of corruption where individuals or companies deliberately conceal income or assets to avoid tax obligations, an argument increasingly discussed in debates around tax evasion as corruption UK law.

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Background and Context of the Debate – Tax Evasion as Corruption 

Under UK law, tax evasion is already a criminal offence, though debates around tax evasion as corruption UK law continue among policy researchers examining how financial crime should be classified.

Examples of tax evasion include:

• Deliberately failing to declare income
• Hiding assets offshore
• Creating false invoices or accounts
• Claiming deductions that do not exist

Serious cases may be prosecuted under multiple laws, including:

• Fraud Act 2006
• Proceeds of Crime Act 2002
• Taxes Management Act 1970

In addition, the Criminal Finances Act 2017 introduced corporate criminal offences for failing to prevent the facilitation of tax evasion by employees or associated persons.

Key Details and Enforcement Measures

HMRC uses a range of enforcement powers when tackling tax evasion:

• Civil penalties and assessments
• Criminal investigations and prosecutions
• Asset recovery under proceeds-of-crime rules
• International information sharing through agreements such as the Common Reporting Standard (CRS)

Recent HMRC enforcement statistics show that the government continues to pursue criminal prosecutions in serious cases, although most tax compliance issues are resolved through civil investigation.

The new research suggests that broader anti-corruption frameworks could further strengthen enforcement in complex cases involving international financial flows.

Who Is Affected

Stronger enforcement of tax evasion rules affects several groups:

• Individuals deliberately hiding income or assets
• Companies facilitating evasion schemes
• Financial intermediaries involved in offshore structures
• Professional advisers who fail to meet compliance obligations

Legitimate businesses are indirectly affected as well. When competitors evade tax, they may gain an unfair financial advantage in pricing or margins.

Expert Analysis (Apex Accountants Insight)

From a professional accounting perspective, the debate highlights how tax enforcement continues to evolve.

Tax authorities globally are increasing cooperation through data-sharing agreements and digital reporting systems. The UK’s Making Tax Digital programme is designed to improve accuracy and reduce errors through digital record-keeping and reporting.

If tax evasion were more widely classified as corruption, enforcement agencies could potentially use additional tools already applied in anti-corruption investigations, including enhanced asset tracing and international legal cooperation.

For compliant businesses, stronger enforcement may reinforce trust in the system and reduce competitive distortions.

Why This Matters for UK Businesses

For UK companies, tax evasion enforcement is not only a legal issue but also a governance concern.

Businesses face several risks if tax compliance systems are weak:

• Regulatory penalties and criminal liability
• Reputational damage
• Financial penalties and recovery of unpaid tax
• Director disqualification or prosecution in serious cases

The corporate criminal offence under the Criminal Finances Act 2017 means companies can be liable if they fail to prevent employees or agents from facilitating tax evasion, reinforcing rules around corporate liability for tax evasion UK.

What Businesses Should Do

Companies can reduce risk through strong compliance procedures:

• Maintain accurate financial records
• Implement internal tax compliance controls
• Conduct due diligence on advisers and intermediaries
• Train staff on anti-tax evasion procedures
• Seek professional advice where tax treatment is unclear

Clear documentation and transparent reporting remain central to HMRC compliance expectations.

How Apex Accountants Can Help with Tax Evasion Compliance

Apex Accountants & Tax Advisors assists UK businesses in strengthening safeguards against tax evasion risks and complying with legislation such as the Criminal Finances Act 2017, which created corporate criminal offences addressing corporate liability for tax evasion UK when employees or associated persons facilitate tax evasion.

Our support in this area focuses on services directly linked to preventing and managing tax-evasion risks, including reviewing internal procedures designed to prevent the facilitation of tax evasion, conducting risk assessments aligned with HMRC guidance, and helping businesses implement reasonable prevention procedures required under the law. We also provide advisory support when companies need to assess potential exposure to corporate criminal offences or respond to HMRC enquiries related to suspected tax evasion or facilitation risks.

If your organisation wants to strengthen its tax governance framework or review its procedures to reduce exposure to financial crime risks, contact Apex Accountants to discuss your compliance requirements with our team. Businesses interested in the wider corporate tax system can also read our detailed guide to corporation tax in the UK.

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Conclusion

The proposal to treat tax evasion as a form of corruption reflects a broader shift in how governments view financial crime. As enforcement becomes more coordinated internationally, the distinction between tax offences and wider economic crime may narrow.

For UK businesses, the message is clear: strong tax governance and transparent financial practices are increasingly essential. Companies seeking clarity on compliance obligations can benefit from professional advice and robust internal controls.

FAQs

What is tax evasion?

Tax evasion is the illegal act of deliberately avoiding paying tax that is lawfully due. In the UK, this includes hiding income, falsifying records, failing to declare profits, or using offshore accounts to conceal taxable income from HMRC.

What qualifies as corruption?

‘Corruption’ generally refers to the abuse of entrusted power for private gain. It can include bribery, fraud, embezzlement, and other forms of financial misconduct. Some researchers now argue that deliberate tax evasion should be treated as corruption because it undermines public finances and institutional trust.

What are the effects of tax evasion?

Tax evasion reduces government revenue that funds public services such as healthcare, infrastructure, and education. It also creates unfair competition by allowing dishonest businesses to undercut compliant firms, weakening trust in the tax system and financial institutions.

What is the most common form of tax evasion?

One of the most common forms of tax evasion is underreporting income. This may involve failing to declare cash payments, omitting revenue from accounts, or hiding profits through undeclared offshore structures or false expense claims.

Is tax evasion a criminal offence in the UK?

Yes. Tax evasion is a criminal offence involving deliberate concealment or misrepresentation to avoid tax. HMRC may pursue civil penalties or criminal prosecution depending on the seriousness of the case.

What is the difference between tax avoidance and tax evasion?

Tax avoidance involves using legal rules to reduce tax liability. Tax evasion involves illegal actions such as hiding income or falsifying records to avoid paying tax.

What is the UK tax gap?

The tax gap represents the difference between tax owed and tax collected. HMRC estimated the UK tax gap at £46.4 billion in 2025.

Can companies be prosecuted for tax evasion?

Companies can face criminal liability if they fail to prevent employees or associated persons from facilitating tax evasion under the Criminal Finances Act 2017.

How does HMRC investigate tax evasion?

HMRC may conduct civil investigations, request financial records, use data-sharing agreements with other countries, and pursue criminal prosecution in serious cases.

What penalties apply for tax evasion?

Penalties can include financial fines, repayment of unpaid tax, criminal prosecution, and imprisonment in serious cases.