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What is a HMRC raid?

A raid, or search and seizure operation, is the culmination of an intensive evaluation by HMRC, often including surveillance, over a period of time.  HMRC do not conduct raids on the whim of an individual Inspector.

The raid is often the first time that the taxpayer will know that HMRC are contemplating a criminal tax prosecution.

 

What is likely to happen?

The raid itself will be conducted under the Police and Criminal Evidence Act (PACE). Search warrants are generally executed before the working day commences, typically around 6am where possible.

The purpose being:

  • to have the recipient at a disadvantage
  • to secure evidence; and
  • to detain apparent suspects whilst undertaking simultaneous raids.

The suspects are likely to be arrested, taken to a police station and interviewed under caution.

The process is massively disruptive and intensely stressful.

 

What should I do?

Anyone subject to a raid, should:

  • obtain specialist legal advice without delay
  • ideally have that legal advice attend each location that a search warrant is being executed
  • use specialist tax support with the specialist legal advice as the lawyer is unlikely to be a tax specialist
  • establish the scope of the search warrant to understand the limits of where HMRC are to enter and what is being seized/removed
  • provide reasonable assistance including provision of computer passwords and access to secure areas
  • allow electronic images to be taken of any computer as required by the warrant
  • request copies of the log sheets of all documentation and property seized and removed
  • implement any action plan that the business may have, including managing what is (or is not) communicated with staff, suppliers and customers

The above is not an exclusive list and specialist guidance should always be taken.

 

Anything to think about?

Yes.

The target of a raid may not be the object of HMRC’s interest.  It is possible that a legitimate business garners HMRC’s interest because it is being exploited by others.  At the point of the raid, HMRC are unlikely to be aware the business has unwittingly been drawn into suspect transactions. HMRC’s initial thought is likely to be that the business is complicit.

The warrant may not be properly executed, for example, the name or address may be incorrect.

Unintended mistakes are made by HMRC and it is essential that specialist support is sought quickly to avoid having to challenge actions after the event.

 

The consequences of a HMRC raid

Leaving aside the disruption, time cost and stress of a criminal prosecution, the sanctions include payment of the evaded tax and a criminal record, potentially involving loss of liberty.

HMRC will subsequently raise a second challenge and pursue the taxpayer under the Proceeds of Crime Act to recover what it deems to be the benefits derived from the criminal actions.

Taxation is a percentage in the £, confiscation is £ for £ and potentially can be £+++ per £.

Confiscation can and does involve:

  • Freezing and seizure of bank accounts; potentially including joint accounts with spouses and accounts of children
  • Forced sale of property and other assets belonging to the taxpayer
  • Tracing and denial of legitimacy of transfers attempting to put assets beyond HMRC’s reach.

Failure to meet the confiscation terms can result in a further custodial sentence, potentially longer than the original offence, which does not reduce the confiscation sum which remains due.

 

How we can help

We can assist taxpayers and their legal advisers in determining all the relevant facts and making defence as robust as possible, minimising the disruption a raid will inevitably cause.

However, if a taxpayer has committed a tax offence but comes forward and makes a disclosure to HMRC under Code of Practice 9 (COP9) then HMRC may be persuaded not to pursue a criminal investigation.

A civil settlement with HMRC will result in tax, interest and penalties being payable and this may be a sizeable sum.  However, the taxpayer will retain their liberty and will not be subject to the far more punitive financial measures arising from confiscation, where not only is tax payable but HMRC have the ability to seize the assets of the taxpayer, even if obtained legitimately.

 

Get in touch with our expert team for help and advice if faced with a HMRC raid or if you wish to make a Disclosure under COP9.

If you cannot find the information you need on our website, please contact Paul Malin or Andy Maxfield using our contact form or email directly to pmalin@hwca.com or amaxfield@hwca.com

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