Criminal Tax Investigations

Gary Green
Gary Green
April 18, 2024

It is HMRC’s aim to ensure that taxpayers comply with the regulations and law, but HMRC has no responsibility for determining whether or not any case will face criminal prosecution. That decision will always be made by an independent prosecution authority. Nevertheless, criminal investigations are a key element of the larger enforcement strategy implemented by HMRC.

HMRC’s general policy for dealing with tax fraud is to use the more cost-effective COP9 civil investigation procedures whenever appropriate. That means criminal investigations are reserved only for cases in which HMRC believes it has to send the strongest deterrent message or in cases where criminal sanction would be the only appropriate response to the type of conduct involved.

When Can A Criminal Investigation Take Place?

There are various circumstances that may see HMRC consider launching a criminal investigation instead of a civil one. These include:

  • If an organised criminal gang is attacking HMRC’s tax system.
  • If systematic fraud is causing losses that seriously threaten the tax base.
  • If the individual being investigation is holding a position of responsibility or trust.
  • If statements that are materially false have been made or documents that are materially false have been provided during a civil tax investigation.
  • If, in pursuance of an avoidance scheme an altered or false document has been used or the material facts have been misrepresented.
  • If there is a suspicion of corruption, conspiracy, deception or concealment.
  • If forged or false documents have been used.
  • If the case involves exportation or importation that breaches restrictions and prohibitions.
  • If money laundering is involved in the case focusing specifically on accountants, advisers and solicitors who are acting professionally to put the tainted money out of law enforcement’s reach.
  • If previous offences have been committed by the perpetrator.
  • If the case involves the theft, unlawful destruction or misuse of an HMRC document.
  • If evidence exists of threats to, assault on, or impersonation of an HMRC official.
  • If a link is suspected to wider international or domestic criminality that involves offences outside HMRC’s administration.

Although criminal investigations into tax affairs are quite rare, their consequences are very severe. In this type of tax investigation, HMRC is not only attempting to recover the amount of tax owed together with interest; rather than financial penalties, they try to ensure a custodial sentence as a penalty for tax evasion.

Criminal tax investigation cases are carried out using the Police & Criminal Evidence Act (or PACE) procedures, including recorded interviews held under police caution. Searches and raids of both businesses and related private premises are also often used to put together evidence that can then be used against taxpayers in court.

Civil Fraud Investigations

As criminal tax investigations are relatively uncommon, HMRC tends to rely on its civil fraud investigation team. They usually deal with investigations in which HMRC has not been able to secure criminal prosecution but they still think that tax evasion has taken place and they are keen to come to a financial settlement. Civil investigations may also take place if HMRC decides that there is a lack of evidence to successfully undertake a criminal investigation.

What Should I Do If I Am Contacted By The HMRC Fraud Investigation Service?

If you get a letter from HMRC and its Fraud Investigation Service, taking tax investigation specialist advice is crucial to ensuring your case will not be escalated. It is vital to take such communication very seriously and to take steps to ensure you have appropriate advice and knowledgeable expert representation.

Usually, you will be notified by HMRC that you are being criminally investigated by sending you an invitation to be interviewed at a police station or alternatively, by carrying out a search and arrest operation. Specialist representation could not be more important if you are the subject of a criminal tax investigation by HMRC.

A team of tax investigation specialists will be able to provide a comprehensive and discreet service tailored around your specific needs and to protect your own interests. With professional help it is often possible to change the focus of a criminal HMRC investigation to a civil investigation and thus protect your assets, reputation and liberty.

In cases where HMRC insists on continuing with criminal proceedings, tax investigation specialists will be best placed to defend you. They can work with top defence lawyers in order to ensure you have the support of a multi-disciplined advisory team and comprehensive representation.

Specialists will be able to thoroughly review any allegations of tax fraud as well as any computations or claims that HMRC put forward in order to present an alternative interpretation whenever appropriate. By choosing a team that has extensive experience in managing HMRC tax investigations to be a component of your defence, you can be sure that representations will be put forward to convince HMRC their concerns regarding your tax affairs are less serious than they originally thought and so hopefully get the criminal charges against you dropped.

With this expert help in your corner, you will be in the best possible position to defend your case and prevent any negative consequences.

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