HMRC Disputes

HMRC are keen to reinforce their role as a prosecuting authority. They have their own absolute choice to decide to conduct a criminal investigation in any matter as they see fit. However, most investigations, even serious fraud, do not result in a criminal investigation but are concluded on a civil basis.

A number of factors influence HMRC in deciding whether an investigation should be on a civil or criminal footing, chief amongst them the degree to which a successful criminal prosecution would have a wider deterrent effect for others, or where a case is so serious that on its own a criminal investigation and possible successful prosecution is appropriate. In other cases, should a taxpayer fail to make a full and complete disclosure to HMRC when challenged by them, or produces a false document to HMRC, there is a much higher chance that HMRC will revert to a criminal investigation.

HMRC’s Criminal Investigation statement and policy is laid out on their website (see here), but factors that will likely weigh heavily in such considerations include:

• Making false statements or supplying false documents to HMRC during an investigation
• Deliberate concealment, deliberate deception, corruption or conspiracy
• Using forged or false documentation
• Where there is a history of tax offences or a repeated course of unlawful conduct or where there have been previous investigations
• Suspicions involving persons in positions of trust, accountants, solicitors, Magistrates
• Misrepresenting fact or altering or falsifying documentation to secure a tax advantage (especially as regards a tax avoidance scheme)
• A systematic fraud where the nature of the fraud or the amount of tax evaded could be considered a threat to the general tax base
• Conspiracy

HMRC’s Criminal investigations are conducted under the powers within the Police and Criminal Evidence Act (or PACE) and we always recommend and work closely with lawyers familiar with tax prosecution activity.

Even where a criminal investigation has begun, it is sometimes possible to persuade HMRC to move matters to a civil footing, and we have much experience of assisting in such negotiations successfully.

Should you be facing a criminal investigation, urgent advice from a specialist is urged. Please contact us.