HMRC Criminal Investigations
HM Revenue & Customs (HMRC) pursue criminal investigations as part of its overall enforcement strategy. A criminal investigation is launched by HMRC where it believes that it is in the public interest to prosecute a taxpayer. This may be in tandem with a prosecution by another agency, eg the Police.
Such investigations are conducted by HMRC’s Fraud Investigation Service (FIS) and could be initiated by sub-departments within FIS, such as the Criminal Taxes Unit or Proceeds of Crime Unit depending on the nature of the perceived offence.
When is it used?
The most cost effective way for HMRC to deal with suspected tax fraud is on a civil basis under the Contractual Disclosure Facility (CDF) procedures and Code of Practice 9.
A criminal investigation is reserved only for cases where HMRC wants to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
- where there has been a conspiracy to conduct a systematic fraud
- where the individual concerned holds a position of trust or responsibility
- where false or forged documents have been used
- where systematic attacks on the collection of tax have taken place
- where matters involve advisors, accountants, solicitors and others that have acted in a professional capacity
How we can help
Anyone faced with a HMRC criminal investigation requires skilled legal representation in the first instance.
Once legally represented, we can work with the taxpayer and their legal advisors to build the defence to the alleged offence.
We are regularly instructed to provide Expert Witness Reports in respect of proceedings, including confiscation proceedings.
We meet with HMRC Experts to negotiate and agree approaches to tax liabilities where they exist and if required to do so to present evidence in Court.
The optimum outcome to prosecution proceedings is that they are dropped, with no further action. This is rare but it can happen.
The next best outcome is that HMRC cease criminal proceedings and carry on matters on a civil footing, a quasi Code of Practice 9 investigation, again rare but it is possible.
Not being subject to criminal proceedings in the first place is preferable above all other options.
If there are deliberate tax failings and the taxpayer acknowledges the inaccuracies, they can avoid prosecution by seeking a Contractual Disclosure Facility (CDF) agreement from HMRC to disclose and remedy the failings. The CDF agreement provides an immunity from prosecution for the offences disclosed to HMRC.