Tax evasion could be treated as a form of corruption, new study argues
Experts warn that without stronger enforcement and clearer rules on corporate liability, the UK will continue to struggle to prosecute tax offences effectively.
Despite having sophisticated financial crime legislation, the country still fails to hold companies and senior executives meaningfully accountable for corporate tax crime and corruption, the research, by Dr Alison Lui, from Liverpool John Moores University and Professor Umut Turksen, from the University of Exeter, says.
With no single, coherent definition of tax crime, they argue, offences are dispersed across common law and a patchwork of statutes, creating uncertainty for policymakers, prosecutors and researchers. This ambiguity allows individuals and organizations to exploit gaps through profit-shifting schemes, opaque corporate structures, and offshore arrangements.
They argue tax crime and corruption are wrongly treated as separate domains; one focused on evasion, the other on bribery and abuse of power. In practice, the two are deeply interconnected. False invoicing, bribery of tax officials, and manipulation of financial records often serve both to evade tax and to disguise corrupt payments. Yet legal definitions of corruption, fraud, and tax offenses remain inconsistent, complicating enforcement and empirical assessment.
'Weak' enforcement
Professor Turksen said, "On paper, the UK has strong tools to criminalise tax offences and hold organizations accountable. Common law offences such as conspiracy to defraud, and statutory offences under the Taxes Management Act and VAT Act, give prosecutors broad scope. Strict liability offences even remove the need to prove intent.
"But in practice, enforcement is weak. HMRC's longstanding preference for civil recovery over criminal prosecution reflects a revenue-first mindset: prosecution is seen as inefficient and risky. Prosecution of corporate tax crime, particularly where tax fraud, tax corruption, and fraud enabled corruption overlap, remains complex and underenforced because of the fragmented legal terrain."
The current legal architecture suffers from significant inconsistencies
Dr Alison Lui, Associate Professor in Corporate and financial Law, LJMU
The study says the scale of underenforcement is stark: of 76,000 suspected tax fraud reports in 2022–23, only 540 individuals were charged.
For corporations, the "failure to prevent" model, introduced in the Bribery Act 2010 and expanded through the Criminal Finances Act 2017 and ECCTA 2023, was intended to overcome the identification doctrine. Instead, it has become heavily intertwined with Deferred Prosecution Agreements (DPAs), which allow companies to avoid conviction in exchange for cooperation and compliance reforms. Critics argue this creates a two-tier justice system where large firms negotiate their way out of criminal liability.
Dr. Lui, lead author on the paper, based in the School of Law and Justice, said, "The UK's corporate criminal liability regime is inconsistent across tax and corruption offences. Similar misconduct, like false invoicing, may fall under entirely different statutes with different thresholds and defences. The Bribery Act's section 7 offence is broad and powerful, while the Criminal Finances Act's tax evasion provisions are narrower and harder to apply.
"The current legal architecture suffers from significant inconsistencies in scope, terminology, and enforcement rationale, especially when applied to corporate failure to prevent tax-related offences. It lacks the coherence necessary for streamlined enforcement and creates significant interpretive latitude."
The triadic dilemma in the criminalisation and prosecution of corporate tax fraud and corruption in the United Kingdom. hdl.handle.net/10779/exe.31251367
Image Credit: Olga Lioncat from Pexels
