Tax Fraud

HMRC investigates hundreds of cases of tax fraud or evasion every year. The majority of its investigations are on a ‘civil’ basis where HMRC is seeking to recover tax, interest and penalties.

However, some investigations into tax fraud are carried out on a ‘criminal’ basis where HMRC is seeking to prosecute. Every year a number of people also disclose a tax fraud to HMRC without being under investigation.

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Tax Fraud - How can we help?

Being investigated for tax fraud or evasion (also called ‘deliberate behaviour’ by HMRC) is a serious matter. The inTAX team has helped hundreds of clients over the years in this position. Whether HMRC is investigating you using COP9 or COP8, or has commenced a criminal investigation, if HMRC’s Fraud Investigation Service (“FIS”) has started an enquiry into your affairs, we can help.

We can ensure that any final settlement is correct and argue for the lowest penalties that we can, depending on your circumstances. We ensure that you understand the process you are in and what needs to be done to move your case to a fair conclusion. If you have an issue that you need to disclose to HMRC, we can also help you do this and manage the whole process for you, taking away the stress and worry, and getting the best possible result.

What you need to know about Tax Fraud

What is tax fraud or evasion?

From HMRC’s perspective, this is where you have not paid the right amount of tax and have done so deliberately. For example, you may have submitted an inaccurate tax return that left some income off, or claimed expenses that either did not exist, or were not actually for your business. It may be that you have taxable income and have not registered to pay tax, but you knew that you should be paying tax. The important point is that at the time you submitted a return, or failed to notify HMRC that you had started to receive taxable income, you knew that your actions were wrong. If you got something wrong because you misunderstood, or didn’t check properly, that might be classified as 'careless', but would not be fraud.

Some cases are quite obviously clear cut. Others can fall into a grey or subjective area. Tax can be complex and sometimes when people get things wrong without knowing it, HMRC can erroneously make an allegation of fraud.

Will I pay a penalty if I have committed tax fraud?

If HMRC is pursuing a civil investigation, then there will probably be a penalty to pay, as well as the tax and interest, if you have committed a fraud. We have helped many clients argue for the lowest possible penalty that their circumstances will allow.

Often in the cases we deal with that have some element of tax fraud, there may be other ‘non-deliberate’ errors. Making sure that deliberate and non-deliberate issues are properly identified will minimise any penalties that need to be paid.

Can I go to jail for tax evasion?

Yes, if HMRC is undertaking a criminal investigation for tax fraud, then if they are successful in prosecution, going to jail is a possibility.

If you are facing a criminal investigation, you should seek help, probably from both a legal specialist and a tax specialist. If you do not know a criminal lawyer, we can suggest several with the right expertise who would be well placed to help. By working alongside criminal lawyers, we have helped de-escalate criminal investigations into civil investigations in some cases. We can also ensure that the amount of tax is correctly quantified and that HMRC has the right facts and numbers.

What is COP9?

Code of practice 9 (COP9) is a way that HMRC investigates tax fraud on a civil basis, with a view to recovery of tax, interest and penalties. This is sometimes also known as the contractual disclosure facility (“CDF”).

What is COP8?

Code of practice 8 (COP8) is used by HMRC to investigate complex avoidance and sometimes where it suspects fraud or evasion.

What is HMRC’s Proceeds of Crime Act Team?

HMRC’s proceeds of crime (POCA) team often investigates tax fraud on a civil basis. Sometimes the POCA team will be referred a case where another agency, for example the police, has investigated a possible criminal matter, but is not pursuing that investigation. Where there is a potential financial or tax implication of the original investigation, the POCA team may investigate to see whether tax has been underpaid.

How does HMRC identify cases to investigate for fraud?

HMRC has access to a vast quantity of data, both from within the UK and also from around the world. It also receives tips from members of the public andmay receive reports from banks and similar institutions about suspicious transactions. Sometimes HMRC is referred cases by the police or other law enforcement agencies.

Where information HMRC holds does not tie up with tax returns received, it may open a fraud enquiry. Anyone who is under investigation for fraud should assume that HMRC has detailed information about them, their businesses, their financial position and also people that they are associated with.

In some cases, HMRC selects a case to investigate for fraud, but no fraud has been committed. This may be because it has misinterpreted data, or some information is missing, which explains a situation. This is not particularly common (HMRC usually does a lot of research), but it does happen, and we have helped clients in this situation to show that nothing was wrong.

What should I do if I am being investigated for tax fraud?

We suggest that you should seek specialist help. At inTAX we have helped hundreds of people in this situation. If you are under a civil investigation, we can make sure that this does not escalate. We will quantify liabilities and deal with all communications with HMRC. Being investigated for fraud is a stressful experience - we can take the worry away and get you the best result.

How we can assist you with tax fraud issues

The inTAX team can help to guide you through if HMRC is investigating you using COP9 or COP8, or has commenced a criminal investigation, or if HMRC’s Fraud Investigation Service (“FIS”) has started an enquiry into your affairs. We aim to move your case to a fair conclusion and on the best terms possible.

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