HMRC’s primary aims are to secure taxpayers’ compliance with UK tax law and recover unpaid taxes. Its policy is to address tax evasion through civil routes where possible to resolve cases as quickly and cost-efficiently as possible. However, HMRC reserves its right to pursue criminal prosecutions where it consider them necessary. Accordingly, whilst the possibility of facing an HMRC criminal investigation may be fairly remote, it cannot be ruled out. With potential penalties following conviction including unlimited fines and imprisonment, it’s essential to take steps to avoid HMRC criminal investigations at all costs.

At Altion Law, we specialise in advising clients on the measures they can implement to minimise the risk of an HMRC criminal investigation. If you are facing an HMRC criminal investigation, we will fully defend your position and use our experience of HMRC’s practices and procedures to secure the most lenient penalty available.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

When will HMRC pursue a Criminal Investigation?

Criminal proceedings are expensive, time-consuming, and can have disastrous effects on defendants. Accordingly, HMRC prefers civil proceedings, which facilitate the swift recovery of tax revenue, to criminal ones.

However, HMRC will pursue a criminal investigation where the circumstances deem it necessary. Generally speaking, HMRC usually reserves its criminal powers for specific circumstances, which include the following:

  • Serious fraud.
  • To deter wrongdoing and reassure the honest majority.
  • Where its civil powers are inadequate.

 

HMRC has provided a list of examples of the types of situations in which it may consider deploying its criminal powers. They include the following:

  • Cases involving organised criminal gangs or systematic tax fraud.
  • Cases involving forged documents.
  • Cases involving money laundering, particularly when those responsible are acting in a professional capacity, for example, solicitors and accountants.
  • Cases involving individuals holding positions of trust or responsibility.
  • Cases in which taxpayers lie to HMRC officers or provide false documents during the course of a civil investigation.
  • Cases involving deliberate deception, conspiracy, corruption, or concealment.
  • Cases involving breaches of importation or exportation prohibitions or restrictions.
  • Cases involving the misuse or destruction of HMRC documentation.
  • Cases in which the individuals involved assaulted, threatened, or impersonated HMRC officials.
  • Cases that HMRC suspects are linked to wider criminal activities.

 

What powers does HMRC have during a Criminal Investigation?

Whilst some criminal investigation activities are reserved for the police force, HMRC officers have far-reaching powers when investigating suspected tax evasion and fraud. They include the following:

  • Arresting suspects.
  • Entering and searching premises.
  • Seizing evidence.

 

What happens following an HMRC Criminal Investigation?

HMRC is responsible for deciding whether to undertake an HMRC criminal investigation into suspected tax evasion and fraud. However, it is not responsible for deciding whether to prosecute the individuals involved. That decision lies with the Crown Prosecution Service. When HMRC’s officers have collated all the relevant material relating to the matter, they will refer it to the CPS to review and make a charging decision.

 

When deciding whether to prosecute, the CPS will consider whether the case satisfies the following two-stage test:

  • The Evidential Stage

The CPS must believe that the evidence collected during the HRMC criminal investigation supports a ‘reasonable prospect of conviction’.  If it does not, the CPS will not proceed regardless of the severity of the tax evasion.

 

  • The Public Interest Stage

If the case passes the evidential stage, the CPS will consider whether a prosecution is in the public interest. This is a careful balancing act, with the CPS considering any factors that increase the need to prosecute as well as any that indicate that a different course of action may be more appropriate.

If the case passes both tests, the CPS will likely pursue a criminal prosecution against the individual or individuals suspected of tax fraud.

 

What are the potential penalties if a Taxpayer is convicted of Tax Evasion?

Defendants convicted of tax fraud following an HMRC criminal investigation can face severe penalties, including prison sentences and unlimited fines. Accordingly, it’s essential to address any allegations of criminality swiftly and effectively to give yourself the best chance of avoiding prosecution.

 

What are the alternatives to HMRC Criminal Investigations?

As we have explained, HMRC favours civil proceedings over criminal ones. As an alternative to an HMRC criminal investigation, it may undertake what is known as a ‘COP9’ investigation. COP9 investigations are the most serious type of civil investigation used by HMRC where it has evidence of serious tax fraud. It involves HMRC issuing a ‘Contractual Disclosure Facility Offer’, or a CDF offer, to the taxpayer. If HMRC issues a CDF offer, you have the opportunity to disclose any conduct that has led to a tax loss in return for immunity from an HMRC criminal investigation. CDF offers are a serious matter, and it’s essential that you understand what you must disclose and the consequences of getting it wrong. Our HMRC solicitors regularly advise clients in receipt of a CDF offer and will ensure you do all that is required to avoid an HMRC criminal investigation.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.