In the year ended 31 March 2019 HMRC carried out over 1,000 “Dawn Raids” in the course of its criminal investigations into tax fraud.
HM Revenue and Customs Tax Enquiries are normally carried out on “civil” lines: that is, they are aiming to obtain additional money (i.e. tax, interest, and penalties) from the taxpayers under investigation. But they also carry out a significant number of Tax Investigations on criminal lines: most of which end up before the courts. And the majority of them produce guilty verdicts; which frequently feature prison sentences and Proceeds Of Crime Confiscation Orders.
HMRC’s elite Fraud Investigation Service is responsible for carrying out Criminal Tax Investigations into suspected tax evasion (as well as running all the civil Contractual Disclosure Facility cases). Criminal cases come in all shapes and sizes. They are not all large and complex.
FIS has similar powers to the police: in that they can obtain search warrants from the courts and arrest people. Search warrants usually allow the HMRC investigators to search: the taxpayer’s home; business premises; storage facilities (including safety deposit boxes; vehicles; and to search any individuals on those premises – and to seize (i.e. takeaway) any items which they feel could be used in evidence. Where the investigators believe incriminating documents may be held at the homes of relatives or business associates, then they will obtain search warrants for those properties as well. So, it is likely that on the day of the swoop, the Fraud Investigation Service officers will execute a number of simultaneous raids on premises linked to the taxpayer and his associates. They can search, and take away, any computer equipment found at the premises (including smartphones).
Search warrants are usually executed very early in the morning. The investigators will have been carrying out discreet surveillance for some time prior to the raid. And they will then usually turn up at the taxpayer’s home well before the time they usually leave in the morning. HMRC will often be accompanied by a uniformed police officer: who is there to ensure that the taxpayer does not create a “breach of the peace”, or otherwise impede the search. If, on presentation of the search warrant, the occupier of the premises refuses to allow HMRC to enter then the Tax Inspectors can do so “by force” – i.e. they can smash the door down! The police officer would then arrest anyone who attempted to prevent the search going ahead. The search and seize operation will inevitably result in HMRC taking away a lot documentation and computers. Many of these will not be returned for several months. HMRC will also seize any large sums of cash at the premises. The cash will only be returned (if at all) following formal representations by a solicitor.
In addition to using these powers in relation to the suspected tax fraudster, HMRC are also raiding offices of accountants, lawyers, and other professionals who may have facilitated tax evasion.
In the year to 31 March 2019 FIS executed 1,082 search and seize warrants. At the same time, they would usually have used their power to arrest the suspects; before taking them to a police station for questioning under caution.
What does this mean for me?
If you have underdeclared your tax and are not currently under a Tax Investigation then you could make an Unprompted Disclosure. Specialist help is frequently required with this process. If you’ve got an ongoing Tax Enquiry then it is crucial that your professional adviser knows how to keep that Enquiry on civil lines. If you are already undergoing a Criminal Tax Investigation then you need specialist help.
How can Lynam Tax Investigation Specialists help me if I’m worried about prosecution?
Lynam Tax has a long history of successfully helping clients avert prosecution for tax offences; and of persuading HMRC to drop Criminal Prosecutions in favour of Civil Tax Investigations. Where HMRC do pursue a Criminal Tax Investigation we have a great deal of experience of working closely with specialist defending solicitors; and in the preparation and checking of evidence bundles: which can frequently lead to large reductions in sentences, and in the amount HMRC seek to recover by way of Confiscation Orders.
For a free and totally confidential discussion,
Paul Lynam: 0845 643 9997
Andrew Nutbrown: 0771 877 8710