HMRC carries out hundreds of thousands of Tax Investigations each year, and the number is increasing. The key to successfully dealing with an investigation is to engage with HMRC early and address any issues head-on. Our dedicated HMRC team of solicitors and barristers specialise in assisting businesses and individuals facing HMRC tax investigations. With our decades of experience, we can guide and support you through the process, ensuring a positive outcome for you and your business.

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.

 

What are HMRC Tax Investigations?

HMRC is entitled to look into your tax affairs as it sees fit. Its aim is to check that you’re paying the correct amount of tax and investigate any anomalies in your tax reporting. In the course of its investigation, HMRC may request to see various documentation, including the following:

  • Your accounts.
  • Your tax returns.
  • Your tax calculations.
  • Your VAT returns.
  • Your PAYE records and returns.

 

What are the different types of HMRC Tax Investigations?

There are several different types of HMRC tax investigations. Some of the most common include the following:

  • General Compliance Checks.

Compliance checks are carried out by HMRC to confirm that taxpayers are paying the correct amount of tax. During a compliance check, HMRC will go through your tax returns and any accompanying documentation and check that everything is in order.

  • Aspect Enquiries.

In an aspect enquiry, HMRC looks into a particular aspect of your tax return, such as a source of income. HMRC officers may request that you provide additional information or documentation so that they can confirm that the information in your tax return is accurate.

  • Full Enquiries.

Full enquiries are wider than aspect enquiries. They involve HMRC reviewing your complete tax return. Sometimes, HMRC officers may ask to visit your premises to review your business’s financial documentation.

  • Civil Investigation of Fraud.

Civil investigations of fraud are extremely serious. If HMRC notifies you that it is opening a civil investigation of fraud, it means it has reason to suspect you of serious tax fraud or dishonesty. You may also see these types of HMRC tax investigations referred to as ‘COP9’ investigations since they are carried out under HMRC’s Code of Practice 9.

A key element of HMRC’s civil investigation of fraud procedure is the ‘contractual disclosure facility’, or ‘CDF’. A CDF is a contract between the taxpayer under suspicion and HMRC whereby HMRC agrees to refrain from opening a criminal investigation in return for the taxpayer giving complete, accurate, open, and honest disclosure of various matters. Those matters include details of all their deliberate behaviour that led to a loss of tax and any other irregularities in their tax affairs, including careless errors.

You have 60 days from receipt of the CDF to either accept or reject it. If you have not already taken legal advice on your position by that point, it’s essential that you do so immediately. If you do not engage with HMRC in connection with the COP9 investigation, you risk facing criminal prosecution.

  • Criminal Investigation

HMRC favours civil proceedings over criminal ones, since they facilitate the swifter collection of unpaid tax. However, HMRC reserves its right to open a criminal investigation whenever it sees fit, and evidence indicates that there has been a rise in the number of taxpayers facing a criminal investigation.

In practice, the types of cases in which HMRC is most likely to use its criminal powers include the following:

  • Money laundering cases.
  • Cases involving an influential person.
  • Tax evasion by organised criminal gangs.
  • Where the taxpayer has committed previous offences in relation to tax.
  • Cases involving forgery.

HMRC’s criminal powers are far-reaching and extensive. They include search warrants, making arrests, and searching suspects. However, HMRC does not decide whether to pursue a taxpayer through the criminal courts. Its officers simply obtain and collate the information required to obtain a prosecution. The final decision lies with the Criminal Prosecution Service (‘CPS’).

If you are found guilty of tax fraud by a criminal court, you may face severe penalties, including unlimited fines and seven years imprisonment. If you have been notified that HMRC has opened a criminal investigation into your tax affairs, or have reason to believe you may face one in the future, expert legal advice is essential.

 

At Altion Law, we are noted for our work in connection with HMRC tax investigations of all types. We understand that our clients often require urgent advice to enable them to assess their options and decide on the best way forward, and we will always be on hand to address any queries or concerns you may have. Our advice is clear, straightforward, and aimed at resolving the issues as quickly and cost-effectively as possible.

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.