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HMRC investigations

Leading HMRC investigation lawyers

Olliers involvement in defending HMRC prosecutions dates back to the 1990s. We were involved in some of the country’s largest MTIC/Carousel fraud trials of the early millennium. HMRC have a range of civil or criminal penalties where they suspect that tax has not been fully paid or is due.

It is important to get the right advice from the outset. The first replies to HMRC can be the difference between a good result and a disastrous result.

How we can offer tax investigation advice

Olliers Solicitors specialise in tax disputes. They will advise you upon all aspects of the investigation from the time that they are instructed.

We can advise you on the following:

  • Advice about civil and criminal Tax Investigations including Code of Practice 8 and 9
  • Interviews under caution following arrest and voluntary interview
  • COP 14 – Corporate Tax Evasion
  • VAT and PAYE Investigations

A tax investigation explained

At its most basic level it is an enquiry undertaken by HMRC. The subject of the enquiry may be a company, a partnership, an individual (as a sole trader) or a director of a company. The enquiry may include any of the taxes that HMRC are responsible for including:

  • Indirect Taxes such as Value Added Tax (“VAT”), Tobacco Products Duties, Climate Change Levy, Customs Duties, Hydrocarbon Oil Duties, Betting and Gaming Duties, Landfill Tax, Stamp Duty Reserve Tax, Alcoholic Liquor Duties, and Aggregates Levy.
  • Direct Taxes such as Capital Gains Tax Corporation Tax, Inheritance Tax and Income Tax.

A common start point for an investigation follows when a taxpayer lodges a Return.  If there is to be an investigation the Tax Authorities will likely send a letter to the taxpayer telling them that an enquiry has commenced. It would also be likely for HMRC to request further information.

Olliers Solicitors are specialist tax solicitors and can explain to you the full scope of a UK Tax Investigation.

The start of an investigation

HMRC are not likely to tell you why an investigation has been opened. The following are some of the more common reasons that a civil investigation has started:

  • Conduct which is thought to be suspicious:  Several unprofitable years? Annual fluctuating revenue? Fluctuating expenses? or, profitability that is inconsistent with industry standards? All of these are reasons that HMRC may open an enquiry.
  • HMRC will pursue campaigns to encourage taxpayers to disclose undeclared income on a voluntary basis.
  • Random checks
  • Information from the general public or associates of the taxpayer
  • HMRC may see inconsistencies in a return submitted by the taxpayer that may be sufficient to open an investigation.
  • Obvious mistakes may be sufficient for further scrutiny
  • HMRC will oftentimes establish target criteria for example within a trade or industry sector or by reference to a geographical location

Where the Tax Authorities have taken an early view that the conduct in question is dishonest and of a criminal nature HMRC have produced guidance:

  • Where the attack on the system is organised or systematic;
  • Is the activity a serious threat to the tax base?
  • Where it is clear that there is an attack on the tax system, where it appears to be organised or systematic;
  • Where a subject individual holds a position of trust or responsibility;
  • Where in the course of a civil investigation false documents or statements are presented to HMRC;
  • Where a false document is produced to enhance the credibility of an avoidance scheme;
  • Where deliberate concealment, deception, conspiracy or corruption is suspected;
  • Cases involve importation or exportation breaching prohibitions and restrictions;
  • Cases involve money laundering with particular focus on advisors, accountants, solicitors and others acting in a ‘professional’ capacity who provide the means to put tainted money out of reach of law enforcement;
  • The perpetrator has committed previous offences or there is a repeated course of unlawful conduct or previous civil action; and
  • In cases involving theft, or the misuse or unlawful destruction of HMRC documents
  • Where there is evidence of assault on, threats to, or the impersonation of HMRC officials
  • Where there is a link to suspected wider criminality, whether domestic or international, involving offences not under the administration of HMRC

Olliers Solicitors have enormous experience in fighting disputes with HMRC at the very highest level in both criminal and civil matters. Contact us for further details.

Is there is an HMRC investigation?

If the matter is civil the Tax Authorities will tell you that there is an enquiry. If they do not they will not be able to establish that any subsequent assessment is effective in the event that the matter is contested by the taxpayer.

Suspected criminal conduct is an entirely different matter. They will not tell you at the start of the investigation. Your first point of contact may well be in an interview with HMRC either on a voluntary basis or following an arrest. Either way it is likely to be pursuant to an administered caution and the provisions of the Police and Criminal Evidence Act 1984.

HMRC may make the initial contact offering a “deal” in the form of Code of Practice 9.  HMRC have powers to offer the taxpayer a civil way out of circumstances that would ordinarily merit criminal penalties. This comes in the form of Code of Practice 9. It requires full disclosure on the part of the taxpayer in the form of the Contractual Disclosure Facility.

As soon as you suspect you are the subject of an investigation by HMRC contact a specialist HMRC disputes solicitor at Olliers Solicitors.

Time limits for HMRC and investigations? 

Legislation strictly proscribes what is possible. HMRC’s own Internal Compliance Manual provides a summary of those time limits by reference to each tax and according to the type of conduct in issue.

Therefore, the investigation can go back from between 1 year to 20 years depending upon the particular tax or duty being investigated and the suspected conduct involved. If the conduct is thought to be deliberate the enquiry can run back for 20 years.

To check whether HMRC have the power to investigate you contact specialist tax lawyers Olliers Solicitors.

When will the tax investigation end?

The range of conduct can be from innocent inconsistencies to a suspected organised and large scale assault on the tax system. In this way the length of the investigation will run accordingly.

In order to bring an investigation to a swift close instruct experienced tax disputes solicitors – Olliers.

What do I need to disclose during the investigation?

Parliament has passed legislation to ensure that Her Majesty’s Revenue & Customs have a raft of powers to grab the information they need. These are some of the options for HMRC:

Is the matter to be determined on a civil basis? HMRC have the power to make an assessment based upon the information that they have at their disposal.

Instruct Olliers Solicitors to ensure that you only disclose that which is required and no more.

Interviews with HMRC

Firstly, where the investigation is a civil enquiry there is no requirement to attend an interview with HMRC. Whether to attend an interview or not is a question that will need some careful consideration by our experienced tax lawyers.

Where the investigation is one of suspected criminal conduct HMRC may request an interview under caution with attendance on either a voluntary or compulsory basis at a pre-arranged time.  Alternatively, HMRC may make an arrest and search premises without any notice at all.  Ordinarily, an interview under caution would take place whilst the person is in custody.

Our specialist tax lawyers have advised taxpayers in interviews with HMRC right across the spectrum of investigations conducted by HMRC: from suspected large scale multi-billion pound criminally organised assaults on the tax base to seemingly innocuous compliance visits. Contact Olliers Solicitors for further information.

Publicity surrounding investigations

It is unusual for HMRC to publicise investigations. Ordinarily, it is only those cases that have some wider significance such as a mass marketed avoidance scheme that would merit some form of publicity.

Publicity commonly follows a criminal investigation particularly where the suspected conduct is of an organised and systemic nature such as large scale carousel fraud.

HMRC also have the power under section 94 Finance Act 2009 to publicise information under their Name and Shame policy.

The Name and Shame policy operates so that the publicity follows an adverse investigatory finding to the extent that the taxpayer has incurred one or more tax penalties and the aggregate list revenue exceeds £25,000.

The information that may be published is:  name, address, nature of business carried on, the amount of the penalty, the time periods to which the penalties relate, and any other such information that HMRC think is relevant to publish to make clear the identity of the person.

Privacy is an important asset to be protected.  Only an experienced tax disputes lawyer can bring to bear the full arsenal of the law to ensure in so far as possible that HMRC do not harm your reputation. Contact Olliers Solicitors for further information.

Tax investigations and outcomes

Will you have a liability to tax at the end of an investigation? The start to answering this question is how much do HMRC say has been underpaid (“the principal amount”). In addition to the principal amount there will also be interest and penalties to consider.

The level of penalties to be imposed will depend upon the conduct of the person so that a person underpaying tax because of a lack of reasonable care will be lower than the penalty to which the person who has deliberately underpaid. The most severe civil penalties are for those that have deliberately underpaid and have tried to conceal their conduct.

In determining the penalty HMRC must then consider what factors exist to mitigate the penalty. The factors that HMRC ought to consider include cooperation with HMRC, the gravity of the wrongdoing and confessions.

To achieve the best possible outcome which may include the lowest possible settlement with HMRC contact Olliers Solicitors as experienced tax counsel for your case.

Is a tax investigation capable of an appeal?

Ordinarily, a tax investigation is not something that can be appealed to any court.  Usually, a right of appeal only arises where HMRC make a determination that amounts to an appealable decision:  either an assessment and/or a penalty.

The right of appeal then arises and the taxpayer has a limited amount of time in which to lodge an appeal with the First Tier Tax Tribunal.  The time limit is for the most part 30 days but there are exceptions to this general position.

At the time that HMRC make an appealable decision the taxpayer can request an informal internal review. In those circumstances a different HMRC officer is asked to review the decision and either affirm the original decision or come to their own conclusion. A right to take the matter to a tax tribunal in order to appeal against the second decision will then arise.

In unusual circumstances there can exist grounds to apply to the Administrative Division of the Queens Bench Division of the High Court to seek a judicial review of HMRC’s investigation. The circumstances would have to be unusual for the Court to grant any form of remedy in those circumstances.

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