Criminal investigation leading to prosecution is a core part of HMRC’s strategy to enforce compliance with tax law, though it is reserved for serious cases. Here, we discuss circumstances in which HMRC might deem a criminal investigation appropriate, the powers to which HMRC has recourse, and what to do if you are facing investigation. For more detailed advice, speak to us now.
When will HMRC pursue a criminal investigation?
Where possible, HMRC will deal with fraud using civil fraud investigation procedures as these are more cost-effective. However, if it feels a criminal sanction is required, including to deter other would-be offenders, it will utilise criminal investigation.
Circumstances in which HMRC will typically consider pursuing a criminal investigation include where:
- deliberate concealment, conspiracy, corruption or deception is suspected;
- false or forged documents have been put forward or materially false statements have been made in the course of a civil investigation;
- money laundering has taken place, especially where an individual has acted in their ‘professional’ capacity to hide tainted money from law enforcement;
- theft, misuse or unlawful destruction of HMRC documents has occurred;
- importation or exportation has breached prohibitions and restrictions;
- an involved individual holds a position of responsibility and trust.
The importance of self-reporting
When HMRC is deciding whether to investigate a case using civil fraud procedures or criminal measures, one factor in its deliberations will be whether the taxpayer made a full, unprompted disclosure of their own offences. If you have knowingly engaged in fraudulent behaviour, or are worried that your actions might amount to fraud, discuss your position with our team today.
How does HMRC discover fraud?
HMRC is well-resourced in its mission to uncover fraud. At the centre of its efforts is ‘Connect’, an impressive computer program that automatically analyses huge quantities of disparate information to spot suspicious connections.
HMRC has an expansive data-gathering reach, with the right to force platforms like Amazon, Airbnb and PayPal to provide data that can help it to identify businesses that may be evading tax. Accounts on sites like Facebook, LinkedIn and Twitter can also provide clues and evidence for HMRC.
In its criminal investigations, HMRC makes particular use of such ‘open source’ material. It can monitor, record and retain data that is openly available, including:
- news reports and TV programmes;
- Companies House and Land Registry records;
- blogs and social media pages where no privacy settings are in place.
What powers does HMRC have?
HMRC’s criminal investigation powers are similar to those of other UK law enforcement agencies. However, its use of these powers is restricted to offences relevant to HMRC, like tax evasion.
HMRC can use the following powers:
- apply for production orders requiring certain information to be produced;
- apply for and carry out search warrants;
- make arrests;
- search suspects and premises after arrest;
- freeze and recover assets via the Proceeds of Crime Act 2002.
In cases of serious crime, HMRC can also apply to use intrusive surveillance powers, including interception of communications and property interference.
Who decides whether a case will be criminally prosecuted?
HMRC does not decide whether a case will be criminally prosecuted. Its job is to collect evidence that will support a prosecution. Once HMRC has concluded its investigation, the decision as to whether to prosecute is taken by the relevant jurisdiction’s independent prosecuting authority. In England and Wales, this is the Crown Prosecution Service.
What to do if you are facing a criminal investigation by HMRC
Our skilled tax defence solicitors are experienced in HMRC’s policies and investigative approaches. We can minimise sanctions against you by ensuring you adopt the right strategy for your case.
If HMRC is not yet involved, a full self-report of offences may be the best way to avoid criminal investigation. If HMRC suspects you of fraudulent behaviour, it might be possible to circumvent further criminal investigation by negotiating a civil settlement with HMRC.
If you have been invited to a voluntary interview under caution with HMRC, you should contact Lewis Nedas Law immediately. It is vital that you have legal representation at this or any future meetings since what you say can be used in evidence against you if you are subsequently prosecuted.
Contact our HMRC Criminal Investigation Defence Lawyers in Central London Today
A criminal investigation by HMRC can have severe consequences, including a lengthy prison sentence if you are successfully prosecuted. Lewis Nedas Law has a wealth of expertise in handling cases where serious fraud is suspected and can help you to navigate the potential minefield of an HMRC criminal investigation. Call us on 020 7387 2032 or use our online enquiry form and we will be in touch directly.
