Although there is no statutory definition of fraud and many tax prosecutions are mounted on the basis of the common law offences of cheat, a new offence of being knowingly concerned in fraudulently evading income tax has been introduced for actions or omissions on or after 1st January 2001 (FA 2000, s. 144). The evasion of capital gains tax and corporation tax remain, for the time being at least, outside the new prohibition.
The new offence can apply not only to the errant taxpayer, but to anyone who is knowingly concerned with the act. That could include any professional adviser, banker, spouse or business partner.
If the offence is tried summarily (e.g. in a magistrates’ court in England or Wales), the maximum penalty is a fine of £5,000 or six months in prison, or both. If the offence is tried on indictment (e.g. in the Crown Court in England or Wales), the fine is unlimited and the prison term can be up to seven years.