The Influence of Game Theory in HM Revenue and Customs’ Choice of Civil or Criminal Enforcement - Business Law Review View The Influence of Game Theory in HM Revenue and Customs’ Choice of Civil or Criminal Enforcement by - Business Law Review The Influence of Game Theory in HM Revenue and Customs’ Choice of Civil or Criminal Enforcement 42 6

This article outlines the method by which self-employed individuals assess and fulfil their income tax obligations. The civil and criminal investigative powers available to Her Majesty’s Revenue and Customs (HMRC) are analysed, adopting a comparative approach, following which we present an application of game theory in determining the strategy for the most advantageous options available to both the taxpayer and HMRC for payment and recovery, respectively. Game theory provides an explanation for the conscious and purposeful decision-making of competing parties, based often on incomplete information and/or the intentions of the parties. This is particularly apt given the nature of the self-assessment tax regime in England and Wales with the choice of the taxpayer to fairly and honestly disclose their income and the tax to be paid, and equally HMRC with its choice to accept or challenge the details in the taxpayer’s return. As such, we use game theory as a means for determining optimal behaviours in difficult circumstances.

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