An HMRC fraud investigation will be conducted if taxes due to HMRC have not been paid because of deliberate dishonesty, or tax credits paid out by HMRC have been wrongfully claimed.

If you are subject to an HMC fraud investigation, please contact us at Altion Law for expert legal advice.

What is an HMRC Fraud Investigation?

An HMRC fraud investigation is when HMRC closely examines the actions of an individual or business which pays tax in the UK. The purpose of this investigation is to check whether the taxpayer is guilty of tax fraud, which is the theft of taxes due to HMRC, or the theft of tax credits paid out by HMRC. Tax fraud includes tax evasion, smuggling goods that are liable to tax, and the theft of VAT – known commonly as carousel fraud.

What triggers an HMRC Fraud Investigation?

An HMRC fraud investigation is usually triggered when HMRC’s system – called ‘Connect’ – flags anomalies regarding your finances. Information is fed into Connect from various sources, including the Land Registry, your bank accounts and the returns you provide to HMRC. All this information is cross-referenced. If anything doesn’t quite add up, HMRC officers will take a closer look. HMRC fraud investigations may also be triggered by tip-offs.

How do I know if HMRC is investigating me?

You might not realise that HMRC is investigating you in the early stages. At some point, however, you will become aware that you are the focus of HMRC’s fraud team. The first indication is often a letter requesting further information, a compliance check or inviting you to admit to tax fraud. The latter is known as a Code of Practice 9 letter, or COP9 for short.

If HMRC suspects that the fraud is serious, they may employ their criminal powers of investigation instead. If so, you may be invited for an interview under caution, arrested or subject to a surprise raid of your premises.

What is the Fraud Investigation Service HMRC?

The 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. It has recovered more than £1 billion from the proceeds of crime and tax offenders since its creation in 2016. If you are suspected of tax fraud, the investigation is likely being handled by HMRC’s Fraud Investigation Service.

What should I do if HMRC is investigating me for fraud?

When you realise that HMRC is investigating you for fraud, we strongly recommend that you instruct a solicitor to represent you. Tax fraud is a serious allegation. A solicitor experienced in HMRC investigations knows how best to handle the situation to bring about a swift and cost-effective conclusion.

You definitely should not try to lie to HMRC, destroy documents or give them the silent treatment. HMRC will not give up easily, so you will need to confront the matter. This is best done with a legal representative by your side.

How long does it take HMRC to investigate?

There is no easy answer to this question as it all depends on the circumstances. An HMRC fraud investigation can last for months. Complex criminal fraud investigations can last for years. The process is typically faster if you agree to co-operate with HMRC during their investigation.

Should I admit to tax fraud using the Contractual Disclosure Facility?

Where tax fraud is suspected, HMRC often invites the taxpayer to admit to their wrongdoing via the Contractual Disclosure Facility (CDF). You will receive a letter in the post saying that you are suspected of fraud. This will be accompanied by a Code of Practice 9 (COP9) leaflet. The letter will say that you have 60 days to decide whether to enter into the CDF, or reject the offer. If you agree, you are admitting to fraud. You will be under a contractual obligation to tell HMRC everything. So long as you make a full disclosure, HMRC will not pursue a criminal prosecution against you.

We recommend that you speak to a solicitor before making your decision. If you accept that you are guilty of tax fraud, then the CDF is often a preferable choice, as it ensures you are immune from prosecution. However, you must adhere to the terms and conditions set down by HMRC. If you do not accept that you are guilty of tax fraud, then the only option is to reject the offer. However, it is vital that you submit evidence of your innocence by way of an explanation. HMRC does consider such submissions. With the right proof, HMRC may drop the fraud investigation and take no further action against you.

Who should I speak to about an HMRC Fraud Investigation?

If you are being investigated by HMRC, please contact us at Altion Law. We specialise in HMRC investigations and can help you through this worrying time.

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.