The HMRC Fraud Investigation Service (FIS) is a specialist department tasked with tackling high-value tax fraud and tax evasion. It undertakes both civil and criminal investigations.
What is HMRC’s Fraud Investigation Service?
The Fraud Investigation Service was launched in April 2016, following the merger of the Criminal Investigations and Special Civil Investigations units. It was created in response to criticism directed at HMRC for failing to successfully prosecute cases of serious tax evasion.
The formation of FIS brought together HMRC’s best criminal and civil investigators. HMRC states this was a “world-first for tax enforcement”, with the partnership allowing HMRC’s investigators “to unlock the most complex financial crimes”.
What does the Fraud Investigation Service do?
FIS is responsible for civil and criminal investigations into the most serious cases of fraud, smuggling and tax evasion. It brings together accountants, cybercrime specialists, criminal justice professionals, tax professionals and other experts to achieve this goal.
FIS officers have wide-ranging powers of investigation. They can interview suspects under caution. They can apply to court for production orders, which demand that a person or organisation hand over certain information and documents. And, they can apply for account freezing orders and confiscation orders.
In addition, HMRC has the power to seize assets and cash under the Proceeds of Crime Act 2002. It the court believes the cash was obtained via criminal activity, or was going to be used in a crime, they can order a forfeiture.
FIS investigations
The Fraud Investigation Service typically pursues civil investigations under:
- Code of Practice 9; or
- Code of Practice 8
Code of Practice 9 (COP9) is used when fraud or dishonesty is suspected. Code of Practice 8 is used when COP9 is not appropriate, or bespoke tax avoidance is an issue.
Where FIS begins a civil investigation, the taxpayer is invited to co-operate by providing full disclosure. This is known as the Contractual Disclosure Facility (CDF). If disclosure is not forthcoming, or is found to be inaccurate, then officers may switch to a criminal investigation instead.
The Fraud Investigation Service will also pursue a criminal prosecution in the most serious of cases, such as those involving organised criminal activity, deliberate dishonesty and fraud. Criminal prosecutions are not as widely used as civil proceedings, but they can and do happen. In fact, HMRC secured 157 criminal convictions in the UK during the 2020 to 2021 financial year alone.
Following a criminal conviction, HMRC will then seek to recover the proceeds of crime via a confiscation order. The court will determine the sum to be repaid. This can be substantial, with one fraud offender ordered to pay £1.7 million, or face having four years added to his nine-and-a-half-year sentence.
More than £1 billion recovered
In a press release published in December 2021, HMRC revealed that “more than £1 billion has been recovered from the proceeds of crime and tax offenders” by the Fraud Investigation Service since its creation in 2016. More than 1,200 seizures of cash and assets have been made. This includes gold bars worth £750,000 from a passenger at Manchester Airport, which were auctioned off with proceeds going back into the public purse.
Simon York, HMRC’s Director of Fraud Investigation Service, said: “HMRC deploys cutting-edge technology to investigate unexplained wealth and uncover hidden assets. Last year alone, we recouped more than £218 million from proceeds of crime.
“We are committed to recovering criminal assets and today the message is clear – crime doesn’t pay.”
Is the Fraud Investigation Service investigating you?
If you are being investigated by HMRC, please contact us at Altion Law as a matter of urgency. If FIS takes the civil route, you will likely receive a letter through the post, notifying you that you are under investigation. You will probably be invited to participate in the Contractual Disclosure Facility. You have just 60 days to determine what to do and inform HMRC of your decision. We can advise you about the options open to you, helping you settle the matter as quickly and as cost-effectively as possible.
We strongly advise you to contact us as a matter of urgency so that we can explain your legal rights and options. For a confidential discussion with a member of our team, please call us now on 01908 414990 or complete an Online Enquiry.
