“Less Serious Tax Evasion investigations”! Really??

According to a report in Accountancy Age,  the number of serious tax fraud investigations carried out by Her Majesty’s Revenue & Customs in the 12 months to 31 March 2012 was down by 23%, compared to the previous year.

Apparently the number of cases registered by HMRC under its Code of Practice 9 “Investigations where we suspect tax fraud, dropped from 4,506 in 2010/11 to 3,456 in 2011/12.

The old saying “there’s lies, damn lies, and statistics” cautions that we need to be careful how we interpret any raw data.  There are three major reasons why the registrations under Code of Practice 9 (COP9) would have fallen; whilst actually the number of serious tax fraud investigations has risen substantially.

One major reason that the number of COP 9 cases would have been lower in the year to March 2012 is that HMRC has introduced a new COP 9 process this year: changing from the old Civil Investigation of Fraud technique to the new Contractual Disclosure Facility.  Prior to the formal launch of CDF both Specialist Investigations and Local Compliance Fraud units held back from issuing COP 9.  From our experience there’s been quite a rush of them being issued since March this year.

Also, the number of criminal prosecutions is going up about fivefold.  So several hundred people who would have got COP9 previously are now being prosecuted instead.

And finally, as they say, a significant number of COP9 investigations started life as voluntary disclosures.  Most of these are now being made under the tax amnesty: i.e. aka the Liechtenstein Disclosure Facility; where there have been thousands of registrations.

So the headline isn’t the whole story; as ever.

Lynam Tax Investigation Experts have a vast amount of practical experience in managing serious tax fraud investigations.  If you are worried about a tax investigation we can advise you on the best course of action.  If appropriate, we can help you manage any necessary disclosures.  If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.

*For a free, private, no obligation consultation, call Paul Lynam today on 0845 643 9997