HMRC Enforcement in 2026: A Shifting Landscape for White-Collar Crime

HMRC is entering a new era of aggressive enforcement. Increased resources, greater access to third-party information and sophisticated data analysis, combined with new incentives for informants, are giving HMRC greater capacity to identify and investigate potential non-compliance.

For white-collar crime practitioners, these developments are significant not only because they may result in more HMRC investigations, but because they are changing how those investigations originate and develop. An enquiry may now be informed by several sources of intelligence – including third-party financial data, information obtained overseas, data analysis and information supplied by an informant – before the subject of the investigation is aware that HMRC has taken an interest.

HMRC’s latest provisional estimate puts the UK tax gap at GBP59.2 billion for 2024–25, equivalent to 6.4% of total theoretical tax liabilities. The government has made it clear that reducing that gap is a priority and has committed to recruiting 5,500 additional HMRC compliance staff by 2029–30, alongside continued investment in technology and data analysis.

The result is an enforcement model that is becoming increasingly proactive.

The practical question for practitioners is therefore increasingly not only what HMRC alleges, but how it arrived at the allegation. Understanding the genesis of an investigation may be critical to testing the assumptions on which it is based and assessing the prospect of escalation from civil enquiry to criminal investigation.

HMRC Connect and data-led investigations

HMRC’s Connect system is an important part of this increasingly data-driven approach.

An advanced, AI-powered data-matching and risk-scoring system, Connect enables HMRC to bring together substantial volumes of information from different sources and identify relationships, inconsistencies and patterns within that data. Information submitted by taxpayers can therefore be considered against the much wider body of information already available to HMRC.

HMRC has previously described the system as capable of building a taxpayer’s “financial fingerprint”. Its significance lies in the ability it gives HMRC not simply to consider a tax return in terms of what it says, but alongside other financial and commercial information. This information may come from financial institutions, Companies House, international exchange-of-information arrangements, digital platforms and other third parties.

HMRC is continuing to invest in connecting data sets and developing more sophisticated risk models.

This presents an important evidential issue. An inconsistency identified through data analysis may explain why HMRC has opened an investigation, but it does not establish why the inconsistency exists. Data may be incomplete, inaccurate or capable of more than one interpretation. Transactions that appear unusual when viewed in isolation may have a legitimate commercial explanation.

Where a client becomes the subject of an enquiry, practitioners should therefore seek to understand what appears to have prompted HMRC’s interest. What information does HMRC hold? What is its likely source? Is HMRC comparing like with like? Has information concerning different entities, accounting periods or transactions been interpreted correctly?

These questions become particularly important when an enquiry moves towards a criminal investigation. A risk indicator generated by Connect may be a legitimate starting point for investigation. It is not evidence of dishonest or deliberate conduct in itself.

The increasing role of data analysis may also generate disclosure issues in subsequent criminal proceedings. Where an investigative decision has been influenced by data from multiple sources, practitioners will need to consider what underlying material is relevant to the prosecution case, what may undermine it and whether the conclusions drawn from the data can be properly tested.

The Strengthened Reward Scheme

HMRC’s increased reliance on technology is accompanied by a renewed focus on human intelligence.

Under the Strengthened Reward Scheme, HMRC may make substantial payments to individuals who provide information concerning serious tax avoidance or evasion. Where information leads to the collection of at least GBP1.5 million in unpaid tax, an individual may receive between 15% and 30% of the tax collected, excluding penalties and interest. Whether a payment is made remains at HMRC’s discretion.

The potential sums involved create a significant incentive for individuals with access to information about suspected tax non-compliance to approach HMRC. Current and former employees, business partners and others may possess information or documents that would not otherwise be readily available to investigators.

The existence of an informant does not necessarily undermine an allegation: insiders can provide highly detailed and reliable evidence. But the source, circumstances and motivation behind the information may require careful scrutiny.

An informant may have only a partial understanding of the relevant arrangements. Relationships may have deteriorated. There may be employment, commercial or personal disputes in the background. The possibility of a substantial financial reward may also be relevant to an assessment of motivation and reliability.

It is therefore important to distinguish carefully between intelligence that has caused HMRC to investigate and evidence capable of proving an offence. Where criminal proceedings follow, issues concerning the informant may become relevant to disclosure, credibility and the defence’s ability to properly test the prosecution case.

The strengthened scheme may accordingly increase both the quantity of information reaching HMRC and the importance of understanding how an investigation began.

The sanctionable conduct regime

The enforcement landscape has also changed for professional advisers.

The Finance Act 2026 replaced the previous statutory regime concerning “dishonest conduct” by tax agents with a regime addressing “sanctionable conduct” by tax advisers. The new test applies to conduct undertaken in the course of acting as a tax adviser with the intention of bringing about a loss of tax revenue, and can include omissions as well as positive acts.

The statutory definition of tax adviser is broad and can encompass organisations as well as individuals and includes those providing tax advice, acting as agents or assisting with documents likely to be relied upon by HMRC when determining another person’s tax position.

Financial penalties may be imposed and, in qualifying circumstances, HMRC can publish information concerning an adviser and the penalty.

For white-collar practitioners, an important consequence is the potential for interests to diverge during an investigation. A company, its directors and its professional advisers may initially regard themselves as facing the same problem. That position cannot simply be assumed to continue.

An accountant or tax adviser may be a witness to the relevant transactions, the author of important contemporaneous documents or potentially the subject of scrutiny in their own right. Questions of privilege, separate representation and conflicts of interest may therefore arise at an early stage. Practitioners acting for corporate clients should consider carefully who provided the relevant instructions, who received the advice and whether individual officers or advisers require independent representation.

The possibility of regulatory or professional consequences adds a further dimension. Even where criminal proceedings do not follow, allegations of intentional involvement in a loss of tax revenue may have significant consequences for an adviser’s professional standing and reputation.

From civil enquiry to criminal investigation

Perhaps the most important practical issue remains the boundary between HMRC’s civil compliance work and criminal investigation.

Not every incorrect return or unexplained discrepancy is evidence of fraud. HMRC has extensive civil powers and many disputes concerning underpayments, or the correct tax treatment of transactions will properly remain within that framework.

Once HMRC suspects deliberate evasion, the stakes change dramatically. Investigations may involve interviews, searches and the examination of significant quantities of electronic and financial material. Serious cases may lead to prosecution for offences including cheating the public revenue, fraudulent evasion of tax, false accounting and money laundering, followed in appropriate cases by confiscation proceedings.

The way in which information is supplied to HMRC, the creation and preservation of documents and the treatment of legally privileged material can assume considerably greater significance if criminal proceedings subsequently become a realistic possibility.

This does not mean that every compliance enquiry should be approached as anticipated criminal litigation. It does mean that the potential consequences of escalation should be understood before irreversible decisions are made.

Early specialist advice can also provide an opportunity to identify factual misunderstandings and address them before they become embedded in HMRC’s case theory. Where appropriate, carefully prepared representations before a charging decision can narrow the issues, provide relevant context or demonstrate why criminal proceedings should not follow.

Investigating the investigation

HMRC’s enhanced capabilities also reinforce the importance of scrutinising the investigative process itself.

More sophisticated methods of identifying suspected non-compliance do not change the evidential requirements of a criminal case. Where the prosecution must establish knowledge, dishonesty or intention, those matters cannot be supplied by a data anomaly or risk assessment alone.

The chain between the initial intelligence and the allegation ultimately advanced is therefore an important one. A discrepancy may have triggered an investigation, but what enquiries followed? What alternative explanations were considered? Is the documentary evidence consistent with the inference HMRC seeks to draw? Does the evidence establish the state of mind of the individual concerned?

The increasing volume of electronic material available to investigators makes these questions particularly important. Large data sets can provide powerful evidence, but they can also obscure context. The defence task may involve identifying the relatively small number of documents or transactions that explain an apparent pattern emerging from a much larger body of material.

The same principle applies to information obtained from third parties or informants. Investigative intelligence should not be allowed to become a substitute for proof.

What changes for practitioners?

The significance of HMRC’s current strategy lies in the interaction between its different elements. Greater access to information provides a broader picture of taxpayers’ affairs. Connect and other analytical tools allow that information to be assessed at scale, while additional compliance officers increase HMRC’s capacity to pursue identified risks. Greater financial rewards encourage insiders to provide information, while the sanctionable conduct regime increases the potential exposure of professional advisers.

For white-collar crime practitioners, this changes the context in which HMRC investigations must be approached.

The origin of the investigation may require greater scrutiny. Civil and criminal exposure may need to be considered in parallel. The interests of companies, directors and advisers may diverge. Questions of privilege, disclosure and document preservation may arise earlier than expected. And where HMRC’s case has developed from data analysis or information supplied by an informant, practitioners may need to look closely at the steps between the initial intelligence and the allegation ultimately made.

HMRC’s increased resources and technological capability will undoubtedly make it a more sophisticated investigator and may enable the authority to identify suspected non-compliance that would previously have gone undetected.

They do not, however, alter the fundamentals of a criminal investigation. Intelligence must be tested, data must be placed in context, and the prosecution must establish the alleged offence through evidence. For those navigating the next generation of HMRC investigations, these principles are only likely to become more important.