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HMRC's Criminal Investigation Policy
HM Revenue & Customs (HMRC) is responsible for investigating suspected criminal activity across the whole range of its responsibilities throughout the UK. With the recent announcement that £900million will be made available to HMRC to tackle evasion and avoidance and fund an intended five-fold increase in criminal tax prosecutions, criminal tax investigations will increase.
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Who is responsible for prosecuting HMRC criminal casework?
Since the formation of HMRC, the Revenue and Customs Prosecutions Office (RCPO) has undertaken the prosecution of HMRC's criminal casework. However, on 1 January 2010, the RCPO merged with the Crown Prosecution Service (CPS) and tax prosecutions are now carried out by the CPS Central Fraud Group.
Whilst HMRC is no longer a prosecuting authority, it continues to investigate any suspected offences it discovers in accordance with its Departmental Strategic Objectives - using either its civil or criminal codes. In recent years, HMRC has mainly dealt with suspected tax fraud/evasion via its Civil Investigation of Fraud (CIF) procedures.
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Has HMRC published its Criminal Investigation Policy?
Yes and this is periodically updated. It currently states that HMRC has complete discretion to conduct a criminal tax investigation in any case, particularly where it feels it needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
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When will HMRC consider commencing a criminal rather than a civil investigation?
Generally, HMRC will consider commencing a criminal rather than a civil investigation for certain fiscal offences, namely:-
- VAT MTIC Fraud;
- VAT 'Bogus' Registration Repayment fraud; and
- Organised Tax Credit fraud.
It is important to note that these offences all involve unlawfully obtaining monies from the Exchequer.
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What has HMRC's priority been in recent years?
HMRC's first Departmental Strategic Objective requires it to improve the extent to which individuals and businesses pay the amount of tax due and receive the credits and payments to which they are entitled by tackling evasion and criminal attacks on the system. HMRC's desire to close the 'tax gap' (difference between the tax estimated to be due if all taxpayers were compliant and the tax actually collected) has never been greater and clearly impacts on the cases HMRC decides to criminal investigate.
Despite HMRC having to deter fraud across the whole system, the reality is that priority is given to cases or commodities that have the biggest potential impact on reducing the tax gap. This explains why HMRC's priority in recent years has been to mainly pursue criminal investigations in respect of :-
- VAT Missing Trader Intra-Community (MTIC) fraud, estimated as having cost the UK £2 billion in 2007/08;
- Tobacco fraud, estimated as having cost the UK £2.7 billion in 2007/08;
- Alcohol fraud, estimated as having cost the UK £350 million in 2007/08; and
- Oils fraud, estimated as having cost the UK £1.05 billion in 2007/08.
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What about other taxes?
Whilst HMRC concentrated its criminal investigative resources on the areas listed above, its wider focus on tackling tax fraud and/or non-compliance (including the Hidden Economy) was mainly via the CIF procedures and various disclosure campaigns.
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Is this likely to change?
Yes. Historically, tax prosecutions have only represented a small minority of the cases where serious tax fraud is suspected. In 2009/10, there were 157 convictions for tax evasion (other than MTIC fraud) compared to 219 in the previous year. HMRC has 'promised' a five-fold increase in prosecutions for tax fraud and so must change the way it investigates tax fraud and must now criminally investigate more cases. If HMRC is to hit its challenging Prosecution targets, we believe that it must now criminally investigate over 1,000 non-MTIC cases per year. Therefore, cases that may have been dealt with under the CIF procedure in the past will now be criminally investigated. In particular, HMRC must send out a deterrent message to those individuals who choose not to come forward voluntarily under its various disclosure campaigns.
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How can OneE TDI help?
Despite HMRC's target to prosecute more tax fraud cases the reality is that if you come forward and make a full voluntary unprompted disclosure (either separate to or via one of HMRC's disclosure campaigns) then you will minimise the likelihood of you being criminally investigated. Therefore, if you know or suspect that you need to disclose undeclared income, profits and/or gains to HMRC, whether they arise in the UK or offshore, OneE TDI can successfully manage the disclosure process to protect you from potential criminal investigation and prosecution. We have up-to-date knowledge of all HMRC campaigns and disclosure facilities and offer confidential, non-judgemental advice to best defend our clients. Our advice saves our clients time and money and helps reduce their potential exposure to tax, interest and penalties.
At the core of OneE TDI is a highly experienced team specialising in all areas of tax disputes and investigations work. We are former HMRC inspectors/investigators – so we know how HMRC thinks! We are constantly dealing with inspectors/investigators so we have up to date insights into current practice and policy and consistently negotiate the best possible terms for our client without the case being criminally investigated or prosecuted.
If you find yourself subject of an HMRC criminal tax investigation you should immediately seek specialist representation to best protect your liberty, your reputation and your assets. OneE TDI works closely with the UK's leading criminal defence lawyers and we have a proven track record in defending clients under criminal tax investigation and working to change the investigation from Criminal to Civil. Our Expert Witness & Forensic service includes a thorough review of any tax fraud allegation and the examination of any tax loss claims/computations put forward by HMRC providing alternative arguments/computations where appropriate.
Please see the Testimonials kindly provided by our clients (or their accountants or lawyers), which confirm our levels of client service.
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How can I contact OneE TDI?
If you would like a free, confidential, no obligation discussion with us please contact either Gary Rowson or Mark Taylor on 0800 652 6156 or complete and submit the online form below.
Whilst we endeavour to provide informative and accurate information, the content on this site is for general information purposes only and should not be taken to constitute tax or legal advice which must always be tailored to individual circumstances. Please contact us if you would like to discuss matters.
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Criminal Tax Investigations