Tax Prosecution and Criminal cases

It’s HMRC policy to deal with Tax Fraud and Evasion by use of the Civil Investigation of Fraud (CIF) procedures, in most cases.  But HMRC have complete discretion to conduct a Criminal Investigation in any case.  They usually do this where they feel they need to send a “strong deterrent message” or where they feel the case is so serious (“heinous” in their language) that only a criminal sanction is appropriate.  Where a taxpayer is investigated using the Civil Investigation of Fraud (CIF) procedures (e.g. Code of Practice 9) but makes materially false disclosures then HMRC will often feel they have no alternative but to prosecute.

HMRC’s criminal casework is done by the Revenue and Customs Prosecutions Office (RCPO); a prosecuting authority reporting to the Attorney General.

Although HMRC is not a prosecuting authority itself, it still investigates under both Civil and Criminal codes, passing cases it wants prosecuting over to RCPO.  In other words, HMRC is still a criminal investigation agency – mainly via its Specialist Investigations and Civil Investigation of Fraud branches.
HMRC has published its prosecution policy and at August 2008 it stated that it will generally consider Criminal, rather than Civil, Investigations in the following situations, amongst others:

• Materially false statements are made or materially false documents are provided in the course of a Civil Investigation;
  
• Deliberate concealment, deception, conspiracy or corruption is suspected;
  
• Using false or forged documents;
  
• Previous Tax Evasion offences  or there is a repeated course of unlawful conduct or a previous Civil Investigation;
  
• People in positions of trust or responsibility (e.g. a company FD who is a qualified accountant, or JP);
  
• Reliance is placed on false or altered documents or material facts are misrepresented to enhance the credibility of a Tax Avoidance scheme;
  
• Systematic frauds where the tax evaded represents a serious threat to the tax base, including conspiracy;

Criminal Investigations can involve the full use of Police and Criminal Evidence Act (PACE) powers: including questioning under caution, arrest, charging, possible detention without bail, surrender of passport, fingerprinting, mugshots, court appearances, “dawn raids”, surveillance, arrests accompanied by uniformed police, searches of homes, business premises and even individuals, Confiscation Orders and prison sentences.  They can be very stressful and very costly: often leading to businesses closing, the loss of all assets and family breakups.

When HMRC consider whether a case should be investigated under the Civil Investigation of Fraud procedures or a Criminal Investigation, one key factor will be whether the taxpayer has made a “complete and unprompted Disclosure of the offences committed”.

Lynam Tax has a long history of successfully helping clients avoid prosecution, and of persuading HMRC to drop Criminal Prosecutions in favour of Civil Investigations.  Where HMRC/ RCPO do pursue a Criminal Investigation we have a great deal of experience of working closely with defending solicitors and in the preparation and checking of evidence bundles: which can frequently lead to reductions in sentence and large reductions in the amount HMRC seek to recover by way of Confiscation Orders.

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