I doubt that very much, anything illegal comes under the proceeds of crime act not inland revenue.
Apologies I missed that first post. Sorry to go off at a tangent here
That's dated Oct 2000, PoCA came into force Feb 2003. 
Yes good point it does indeed predate POCA which is an interesting one with regard to HMRC, but does not alter the underlying principle that HMRC will not routinely inform the police of illegality and will happily accept tax revenue from an illegal business.
The best scenario for HMRC is a thriving trader paying tax on good profits and therefore no real need to question the legality of that trader.
If they suspect tax evasion then a basic investigation process for recovery may take place hopefully to recover more revenue without jeopardising the trader and therefore losing future revenue. HMRC also have to balance the cost of any investigation against potential revenue recovery. Once again the legality is not important and if during that process illegality is uncovered, HMRC will not normally inform the Police unless a serious crime involving harm etc.
The next option is a civil court recovery action to seize money and assets which may result in the business folding. This is costly for everyone.
If HMRC believes that money laundering has taken place in order to hide potential assets, then only then will they consider working with the Police and CPS to pursue a criminal action in the hope of widening the net on potential asset recovery. POCA for the revenue tends to be used as a last resort “sledgehammer to crack a nut” and is a complex and costly process and requires a guilty verdict to succeed. (although I think POCA does allow a civil action instead where the burden of proof of illegality is less?)
The Sandy’s Superstar’s parlour in Manchester is a classic example of how the revenue were happy to take tax from an illegal business for 20 years before deciding there may be richer picking by bringing criminal money laundering charges and recovery of ‘significant’ monies under POCA. They failed badly, costing the tax payer money in the process, as well as any future tax revenue that the thriving business would have continued to contribute .... albeit illegally.
