HMRC opens thousands of inquiries into UK taxpayers’ affairs each year. Those inquiries can range from straightforward checks to all-encompassing fraud investigations. The most serious tax fraud investigations are usually undertaken by HMRC’s Fraud Investigation Service (FIS), which comprises the most highly trained tax fraud investigators.

If you receive notification that a tax fraud investigator is looking into your tax affairs, timely legal advice is crucial. Our HMRC team specialises in representing clients who are being investigated for suspected tax fraud. We assist them in avoiding criminal prosecutions wherever possible or, where a criminal prosecution is unavoidable, in vigorously defending the proceedings. We are recognised experts in this complex, niche legal area, so when you instruct us, you can be confident that you are receiving the very best legal support and have the best chances of securing a favourable outcome.

 

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 is a Tax Fraud Investigator?

FIS is frequently referred to as HMRC’s ‘elite’ division, and for good reason. The tax fraud investigators within FIS are among the most experienced and skilful in the UK. During the financial year 2022-2023, FIS generated a compliance yield of over £4 billion.

The FIS has teams throughout the country. The tax fraud investigators working within each team follow the same framework and guidelines, but they sometimes interpret them differently. Our HMRC solicitors and barristers have represented clients all over the UK and understand the nuances of each team of tax fraud investigators. We tailor our advice to their differing approaches to secure the best result.

FIS defines ‘fraud’ as any deliberate concealment, omission or misinterpretation of information or where a taxpayer presents false or deceptive information with a view to gaining a tax advantage.

The types of matters with which HMRC’s tax fraud investigators might deal are as follows:

  • Taxpayers purposefully submitting false tax returns.
  • Taxpayers hiding wealth offshore.
  • Taxpayers falsely claiming reliefs.
  • Taxpayers falsely claiming repayments.
  • The smuggling of taxable goods.

 

How do Tax Fraud Investigators recover unpaid Tax?

Despite the severity of the cases with which the FIS tax fraud investigators deal, they prefer to use their civil as opposed to their criminal powers where possible. Civil proceedings enable the FIS to recover unpaid tax swiftly and cost-efficiently, and to impose financial penalties on fraudulent taxpayers, which can be as high as 200% of the unpaid tax.

The majority of FIS investigations are either Code of Practice 8 or Code of Practice 9 investigations, more commonly referred to as COP8 and COP9 investigations. FIS opens COP8 tax investigations in situations where it suspects a taxpayer of underpaying tax through the use of complex tax structures. Crucially, FIS does not open COP8 investigations in situations involving suspected deliberate tax evasion or tax fraud. On the other hand, when FIS initiates COP9 investigations, it suspects the taxpayer of serious fraudulent activities. Under the COP9 procedure, HMRC agrees not to pursue a criminal investigation in return for the taxpayer explicitly admitting their fraud and paying all their unpaid tax together with substantial financial penalties.

COP9 investigations are the most serious civil investigations that HMRC undertakes. If you receive notification that you are the subject of such an investigation, you must take it seriously. If you fail to properly engage with HMRC in connection with a COP9 investigation, there is a very real chance that a tax fraud investigator will open a criminal investigation into your activities. If that investigation leads to a prosecution, the penalties if you are convicted are severe, including a fine and prison sentence.

If you are facing a COP8 or COP9 investigation, our HMRC solicitors and barristers are here to help. We will review the circumstances of your case and advise on your position. We will assist you in fulfilling your obligations concerning the investigation and use our experience and expertise to achieve the optimum outcome.

 

When will a Tax Fraud Investigator pursue a Criminal Prosecution?

While HMRC’s tax fraud investigators prefer to pursue civil rather than criminal prosecutions, they expressly reserve their rights to deploy their criminal powers where they deem necessary.

Examples of the types of cases in which FIS might open a criminal investigation include the following:

  • When they do not consider their civil powers sufficient to enable them to get to the bottom of the matter or recover the amount of tax at stake.
  • When they are keen to send a strong deterrent message and reassure the honest majority that tax fraud does not pay off.
  • When the nature of the fraud in question is particularly serious.

HMRC’s tax fraud investigators do not decide whether to prosecute a taxpayer for tax evasion. They simply gather the evidence required to uncover the full extent of the fraud and pass it on to the Crown Prosecution Service to make the final decision.

 

If HMRC’s tax fraud investigators open a criminal investigation into your tax affairs, speak to us immediately. With our support and guidance, you stand the best chance of negotiating a settlement with HMRC and avoiding a prosecution or of successfully defending any criminal proceedings initiated against you.

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.