HMRC will conduct a tax fraud investigation into a business’s affairs if they suspect tax evasion. Facing a tax fraud investigation can be stressful, time-consuming and costly. To minimise the disruption to your business operations and secure the most lenient penalty, you should take expert legal advice on your position as soon as you become aware that a tax fraud investigation seems likely.

At Altion Law, we have a specialist HMRC team of solicitors and barristers dedicated to helping clients with all aspects of tax law and procedure, including tax fraud investigations. We will take the time to get to know you and your business so we can give focused, practical advice to resolve the issue as quickly and cost-effectively as possible.


For a confidential free discussion, call us today on 01908 414990,  alternatively email us at or complete our Free Enquiry Form and we will call you back.


What is Tax Fraud?

Tax fraud is any wilful and deliberate omission, falsification or misreporting of information with a view to obtaining a tax advantage. Tax fraud is unlawful. Tax fraud is essentially the same as tax evasion but differs from tax planning and tax planning. Tax planning is lawful and involves using tax reliefs to reduce the overall tax payable. Examples of tax planning include using a tax-exempt ISA for savings and contributing to a pension scheme. Tax avoidance involves bending the rules to take advantage of loopholes in the system to pay less tax. Tax avoidance is, strictly speaking, often legal, but HMRC nevertheless takes a dim view of tax avoidance schemes and using one may land you in hot water. Speak to us if you are unsure.

Examples of tax fraud include the following:

  • Submitting false tax returns.
  • Underreporting or hiding income.
  • Making false deductions to lower your taxable income.
  • Smuggling taxable goods.


What is a Tax Fraud Investigation?

HMRC carries out thousands of tax compliance checks each year. The checks may be triggered by unusual activity detected by HMRC’s sophisticated data mining tool, tip-offs, concerns relating to practices within a specific industry or sector, or for various other reasons.

The first indication that HMRC is carrying out a tax fraud investigation into your business is often the receipt of a letter from them requesting further information regarding a specific aspect of your tax return or your tax affairs in general. If you fail to comply with the request, or if the information indicates tax evasion, HMRC will undertake a thorough review of your activities, which will likely involve them deep diving into your financial records and interviewing you.

HMRC has wide-reaching powers to tackle tax fraud. Their preferred route is pursuing a civil claim against the taxpayer since this elicits a swift recovery of the unpaid tax. HMRC may also impose a fine of up to 200% of the unpaid tax. If HMRC suspects that a significant amount of tax has been lost, they may task highly trained HMRC officers with undertaking a serious civil investigation known as a Code of Practice 9 investigation, or COP investigation. In a COP investigation, HMRC will allow you 60 days to disclose all unpaid tax under the Contractual Disclosure Facility.  If you do so, repay the tax, and admit liability for fraud, HMRC will agree to refrain from seeking criminal sanctions. If you receive a letter informing you that a COP investigation is underway, you must address the issue as a matter of urgency and take legal advice. COP9 letters are never sent speculatively; if you receive one, HMRC has evidence of tax fraud and will prosecute if you do not engage with them.

HMRC is at liberty to pursue criminal prosecutions in all cases involving tax fraud. However, they tend to reserve criminal proceedings for the most serious cases, such as those involving organised criminal gangs, or where the loss of tax is notable. Sometimes, though, HMRC may go down the criminal route to send a deterrent message to others and to reassure honest taxpayers that tax evasion is taken incredibly seriously.

HMRC has extensive powers when carrying out a criminal investigation. For example, they can apply for and execute a search warrant, whereby HMRC officers attend your premises early in the morning and seize evidence. They also have powers of arrest. The penalties on conviction for tax fraud are severe and include prison sentences of up to seven years and an unlimited fine.


How we can help if you are facing a Tax Fraud Investigation

A tax fraud investigation is a serious matter. If not handled correctly, the consequences for you and your business can be disastrous. Timely legal advice is essential in ensuring you understand your rights and are best placed to deal with the investigation. Our specialist HMRC lawyers have vast experience assisting clients facing tax fraud investigations. We will review the allegations and work with you and your other professional advisors to devise a strategy to minimise your liability. Often, cooperating with HMRC and making voluntary disclosures of any unpaid tax can result in far less severe penalties, so we will help you to collate all relevant information and documentation and liaise with HMRC on your behalf to negotiate the best possible outcome.


For a confidential free discussion, call us today on 01908 414990,  alternatively email us at or complete our Free Enquiry Form and we will call you back.