Tax Prosecution and Criminal cases
It’s HMRC policy to deal with most Tax Fraud and Evasion cases by using the Contractual Disclosure Facility (CDF) procedures. But the tax authority has complete discretion to conduct a Criminal Investigation in any case it sees fit. The taxman usually does this when he wants to send a “strong deterrent message”; or where he feels the case is so serious (or “heinous” in official-speak) that only a criminal sanction is appropriate.
Where a taxpayer is investigated using the suspected serious tax fraud CDF procedures (aka Code of Practice 9) but does not fully co-operate; or makes a denial; or makes materially false disclosures: then HMRC will often feel obliged to prosecute.
Once a decision is made to convert a case from a civil tax enquiry to a criminal tax investigation, it is passed to the HMRC Criminal Taxes Unit (CTU). Whilst the legal proceedings are then handled by the Crown Prosecution Service (CPS) HMRC is still a criminal investigation agency – mainly via its Specialist Investigations and Local Compliance Fraud branches, as well as the CTU.
HMRC has published its prosecution policy. Cases where it will usually consider Criminal, rather than Civil, Investigations include:
- Materially false statements made, or materially false documents provided, in the course of a civil tax investigation;
- Deliberate concealment, deception, conspiracy or corruption is suspected;
- cases involving false or forged documents;
- Previous Tax fraud offences; or a repeated course of unlawful conduct; or a previous Civil Investigation [particularly where they involve incorrect Statements of Assets or Certificates of Full Disclosure];
- People in positions of trust or responsibility (e.g. a company FD who is a qualified accountant, or JP);
- In a Tax Avoidance scheme - where reliance is placed on false or altered documents; or material facts are misrepresented.
Criminal Tax Investigations can involve the full use of Police and Criminal Evidence Act (PACE) powers including: surveillance; “dawn raids”; questioning under caution; arrests accompanied by uniformed police; charging; possible detention without bail; surrender of passport; seizing of cash, computers and other assets; fingerprinting; mug-shots; court appearances; searches of homes, business premises, premises of known associates and family members; Confiscation Orders; curfews; electronic tagging; and custodial prison sentences. They can be very stressful and very costly: frequently leading to businesses closing; the loss of assets; and family breakups.
When HMRC consider whether a case should be investigated under the Contractual Disclosure Facility procedures or a Criminal Investigation, a key factor is whether the taxpayer has made a “complete and unprompted Disclosure of the offences committed”.
Get out of jail free card! Time limited offer!
Until April 2016 almost everyone who is worried that they may be subject to a criminal investigation for tax fraud can get guaranteed immunity from prosecution - by registering for the Liechtenstein Disclosure Facility (LDF); and then going on to make a full voluntary disclosure. Our tax investigation specialists have a massive amount of experience in helping clients with the LDF, and are ready to assist you now.
Lynam Tax Enquiry Experts have a long history of successfully helping clients avoid prosecution, and of persuading HMRC to drop Criminal Prosecutions in favour of Civil Tax Investigations. Where HMRC/ CPS do pursue a Criminal Investigation we have a great deal of experience of working closely with top quality defending solicitors, and in the preparation and checking of HMRC's evidence: which can often lead to reductions in sentence and large reductions in the amount HMRC seek to recover by way of Confiscation Orders.
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