An injection of funds two years ago to help crack down on tax fraud saw HMRC launch 240 prosecutions against individuals last year, a jump of 53 per cent on 2011, according to an international law firm.
But the number of convictions was only up 4 per cent - 154 compared to 151 - meaning a lower proportion of actions are ending in convictions. Pinsent Masons said there are doubts about the Criminal Prosecution Service’s (CPS) ability to deal the increased caseload.
'While HMRC may have benefitted from extra funding from the government to deal with tax fraud, the CPS hasn’t,' said Jason Collins, head of tax at Pinsent Masons.
Tax returns: 'Tens of thousands of [fraud] cases are looked at, but the vast majority go through civil settlement procedures' an HMRC spokesman said'Despite the CPS’ intention to increase their tax fraud conviction rate, they have told us they will be relying on existing budgets to do so.'
'The danger here is that a bottleneck may emerge if cases go through HMRC processes swiftly, but the CPS is unable to keep up. Both HMRC and defendants could be left in limbo waiting for the CPS to work through what could become a huge backlog.'
An HMRC spokesman said that behind the figure of 240 prosecutions, many thousands more cases were resolved before they got to the prosecution stage.
'Tens of thousands of cases are looked at, but the vast majority go through civil settlement procedures, so the person will pay a penalty, or might just have to pay what they owe,' he said.
And a specialist HMRC unit dealing with the country’s wealthiest taxpayers also brought in a record £220million of extra tax last year.
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The top 1 per cent of earners pay more than a quarter of all tax revenue, so it is an important target for the taxman.
'These people pay billions of pounds in taxes, but this £220million is additional, and may be down to tax avoidance or evasion,' the spokesman told This is Money.
Jason Collins said: 'HMRC has been using the £900million in extra funding for tax avoidance and evasion work announced in 2010 to increase the number of criminal investigations it opens and the speed with which it gets cases to the Crown Prosecution Service.
'It has adopted a very aggressive stance towards investigating individuals suspected of tax fraud.
'It has become more important than ever before that individuals and businesses are tax compliant. Any attempts to deceive HMRC, or even serious compliance errors, are now much more likely to be picked up on and end up in the courts.'
HMRC should focus some of its funding on improving civil procedures for bringing in potentially missing taxes, he said, rather than concentrating on increasing its criminal investigations activity alone.
'We’d like to see more emphasis on improving the amnesties that are available to resolve tax avoidance or tax evasion issues,' explained Collins.
'Civil procedures and amnesties can be a very cost-effective way to boost tax yields. Options are limited, especially for individuals wanting to come clean with HMRC over legacy tax avoidance issues, particularly as some bought tax schemes when the climate for these things was very different.'
But HMRC said criminal investigation is an important part of its overall enforcement strategy: 'Criminal investigation will be reserved for cases where HMRC needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.'
Such instances include, it said, cases of organised criminal gangs, systematic frauds where losses 'represents a serious threat to the tax base', where an individual holds a position of trust or responsibility, where materially false statements are made, false documents provided, or deliberate concealment, deception, conspiracy or corruption is suspected.
HMRC has said its extra £917million funding 'will secure around £2billion in additional revenue, taking total compliance revenues to around £22billion by 2014-15'.
'We are using [the funding] to increase staffing in key teams and increase criminal prosecutions for tax fraud five fold by the end of the 2015,' said a spokesman. 'The vast majority of taxpayers are honest and pay what they have to under the law, so it is only right that we tackle the small minority of cheats who deprive the country of vital revenues.'