By Siobhain Egan – Director (Non-Executive)
Tax probes into the affairs of high earners look set to rise after HM Revenue & Customs doubled revenues from its investigations last year.
According to a freedom of information request made by The Times, HMRC’s wealthy and mid-sized business compliance unit — responsible for scrutinising the tax affairs of individuals earning over £200,000 or holding assets above £2 million — recovered more than £1.5 billion in 2024, twice the figure recorded during the previous 12 months.
Buoyed by the unit’s success, HMRC will recruit 400 additional specialist compliance officers over the next four years — a move the government hopes will generate at least £500 million in extra tax revenue by 2030.
In its fight to claw back some of the £5.5 billion of tax revenue that disappears each year, the government has also launched a generous new reward scheme for whistleblowers inspired by the US’ approach. Previously, whistleblowers were rewarded on a discretionary basis, with modest payouts in comparison to those in the US and Canada. Officials believe this is why few people come forward but are hopeful that awards of up to 25% of the tax recovered in a successful case will be a powerful incentive.
An HMRC criminal investigation can result in heavy fines, frozen assets or even a prison sentence. With these developments in mind, understanding what to do if you find yourself in HMRC’s sights is essential for business owners and high net worth individuals alike.
How does the HMRC choose who to investigate?
Criminal investigations often begin with a tip-off from another enforcement agency or regulator, either through intelligence-sharing or a suspicious activity report linked to suspected money laundering.
Investigations may also be triggered by HMRC’s own compliance activity, such as irregularities spotted during routine checks or patterns in submitted tax returns. The agency doesn’t stop there: it also keeps a close eye on publicly available sources like media coverage, Companies House filings and Land Registry records, all of which can reveal signs of potential tax fraud.
Before launching a criminal investigation, HMRC considers several factors, including the seriousness of the suspected fraud, whether there’s evidence of deliberate concealment or deception, the use of false documents, and whether civil powers alone are enough to recover the tax owed. It will also weigh up any links to organised crime, money laundering, or other financial offences, and whether taking criminal action would send a strong deterrent message.
How do I know if HMRC is investigating me?
There are several ways in which you will find out if the HMRC is looking into you or your business. In most cases, you will receive written notification, such as a compliance check letter, which is civil in nature, but has the potential to escalate, and seeks to ascertain whether a tax return or claim is accurate.
If suspected of criminal activity, you will receive a “notice of investigation,” which will often refer to Code of Practice 9 (COP9) – for suspected serious fraud, Code of Practice 8 (COP8) – for complex cases without deliberate fraud, or sections of law such as the Proceeds of Crime Act 2002. This may come with a request for an interview under caution, or a demand for specific information.
More dramatic, but less common, are raids and arrests. These take place without warning and are usually carried out when the case involves serious, deliberate fraud, if HMRC suspects the person may destroy evidence, or they are already under surveillance.
What powers does HMRC have to carry out criminal investigations?
HMRC has many of the same investigative powers as the police, but they are limited to investigating suspected tax-related offences. Aside from obtaining search warrants and carrying out raids, it can arrest and question suspects, request court orders to compel individuals to hand over documents and other evidence, seize or recover assets linked to criminal activity.
In particularly serious, complex cases, HMRC can intercept communications, carry out covert surveillance, and or even tamper with a suspect’s property to fit listening devices, cameras or tracking devices. These powers fall under the Regulation of Investigatory Powers Act (RIPA, 2000) and the Investigatory Powers Act (2016) and require high-level judicial approval.
I have received a letter from HMRC telling me I am under criminal investigation. What should I do?
First of all, ensure that the letter is genuine. HMRC is a popular target for scammers, who are becoming increasingly sophisticated in their methods. Between November 2023 and October 2024, HMRC received 144,298 reports of fake letters, emails, phone calls, texts, social media messages and more, in so-called “phishing” attacks – a rise of 16.7 per cent on the previous year. In the same period, fraudsters netted £47 million after using stolen personal data to create 100,000 fake HMRC accounts and submitting fake tax rebate claims.
Check that any contact details in the letter match those on the HMRC website, and if you are in doubt, call the tax office on the number from the site – not the letter.
- Try not to panic. Read the letter carefully in order to understand the allegations and what HMRC is requesting from you. Do not ignore it or put it to one side – it will not go away, and missing deadlines can lead to financial penalties.
- Seek legal advice. Speak to a solicitor experienced in criminal tax investigations. Early advice can shape the entire course of your case.
- Gather the requested documents and information – but it’s advisable to check with your lawyer before sending anything off.
- Keep records of all contact with HMRC, including dates, times, and the names of any officers involved.
What should I do if HMRC asks for documents or information?
HMRC can compel you to hand over specific documents or information, typically through a court order or formal notice issued under HMRC’s statutory powers.
If you receive such a notice, do not destroy, alter or conceal any material — doing so may amount to a separate criminal offence.
It’s also important to assess whether the request has been correctly made. In some cases, it may be possible to challenge the notice or order, either because it’s too broad or procedurally flawed. Taking legal advice early will help determine if a challenge is appropriate and how best to approach it.
Once you’ve confirmed what must be disclosed, you must comply with the stated deadline. Failure to do so can lead to fines or imprisonment.
Finally, keep clear records of your response – including what was provided, when, and to whom – to protect yourself in case of any later dispute.
What should I do if the HMRC raids my property?
HMRC carry out around 12 raids a week throughout the country. If its officers turn up at your door, try to stay calm and avoid getting into arguments. It won’t help could make things worse. Your priority at this stage is to ensure the search is carried out lawfully.
- Ask to see the search warrant and check it correctly covers the premises being searched.
- Call your solicitor immediately and ask them to come and monitor the search. They can help ensure it stays within the warrant’s scope and is conducted appropriately. If officers appear to overreach, raise this and document it.
- Request that the HMRC officers wait until your legal representative has arrived until they start the search.
- Cooperate, but don’t overshare. Only provide what is required — don’t offer additional documents or information not specified in the warrant.
- Ask for a list of all items seized before the officers depart.
What happens if I am arrested by the HMRC?
If HMRC arrests you, you’ll usually be taken to a police station, rather than an HMRC office. The process is governed by the Police and Criminal Evidence Act 1984 (PACE), just like any other criminal arrest in the UK. You can be held in custody for 24 hours without charge, the same as in a police-led investigation.
You should speak to a solicitor experienced in HMRC criminal cases as soon as possible and avoid answering any substantive questions until you’ve received legal advice. Just like any other suspect, you have the right to remain silent while being interviewed under caution. Deciding whether to answer questions is a critical choice, and your solicitor will be able to advise you on what to do.
Keep detailed notes of every interaction with HMRC. Accurate notes, including the names of officers, the time and date of events, and any documents you are shown, will give your legal team the full picture and will help them respond quickly, provide effective advice, and challenge any overreach.
Can HMRC freeze or seize my assets?
Under the Proceeds of Crime Act (POCA 2002), HMRC has the scope to seize assets from individuals and businesses suspected of criminal activity. This can include cash, physical assets, and increasingly, crypto assets. Assets may be held – or “detained” until the investigation concludes, after which they may be returned or forfeited to the state.
HMRC may also freeze bank accounts while investigations or proceedings are ongoing. These measures can be highly disruptive, freezing accounts and assets without notice and potentially crippling a business’s operations. Freezing orders can be challenged, which may lead to them being modified or even lifted in their entirety.
If a criminal conviction follows, the court may impose a confiscation order to recover any financial gain linked to the offence. Separately, HMRC can apply to the High Court for a civil recovery order — allowing it to seize assets thought to be the proceeds of crime, even without a conviction.
What are the potential results of an HMRC criminal investigation?
Like any other criminal investigation, various outcomes are possible depending on the strength of the evidence, the seriousness of the alleged offence, and how the case is handled.
No further action
HMRC may close the case without charges if there is insufficient evidence. This brings the investigation to an end with no criminal penalties.
Financial Penalties
Where HMRC identifies a breach of tax law not deemed sufficiently grave to justify a criminal prosecution, it may impose financial penalties such as fines or interest payments on unpaid taxes.
Civil settlement
HMRC may choose to resolve the matter through a civil financial agreement rather than pursuing criminal charges. This typically involves paying the tax owed, along with any interest and other penalties. Agreeing to a civil settlement often prevents a criminal prosecution, so long as all conditions of disclosure are met.
If serious tax fraud is suspected, HMRC may offer the option of “civil diversion” under its Code of Practice 9. This offers the suspect the chance to avoid criminal prosecution in return for a full admission of wrongdoing, as well as paying all outstanding tax, interest and penalties. COP9 is a tightly controlled route for serious fraud, while a civil settlement can apply more broadly. Read our blog on COP9 for further information on this option – Keeping it civil: the COP9 route to avoiding criminal charges for tax fraud
Prosecution and criminal charges
If HMRC uncover strong evidence of serious tax fraud, it may refer the case to the Crown Prosecution Service (CPS), which will decide whether to bring criminal charges. If the case proceeds to court and results in a conviction, the consequences can be severe, including:
- Heavy fines imposed by the court
- Imprisonment, depending on the nature and scale of the offence
- A criminal record, which can impact employment, travel, and reputation
- A confiscation order, allowing the state to recover profits from the offence
- Reputational damage resulting from publicity around the case.
HMRC secured 344 criminal prosecutions in the year ending 31 March 2024 — a significant rise on the 240 cases brought the previous year. This marks a clear return to more assertive enforcement, as HMRC ramps up its criminal investigations following a pandemic-era slowdown.
About the author
Siobhain Egan is a leading specialist in HMRC-related investigations and proceedings.
She defends clients facing both civil and criminal investigations by HMRC, including criminal prosecutions, account freezing orders, and proceedings under the Proceeds of Crime Act (POCA). Siobhain has been consistently ranked by The Legal 500 since 2002 and is widely recognised for her high success rate. She is regarded as one of the leading lawyers in this complex and highly specialised field.
How Lewis Nedas can help
If you are facing a criminal investigation by HMRC, early legal advice is critical. We have extensive experience representing individuals and businesses under criminal tax scrutiny, including dawn raids, interviews under caution, asset seizures, and high-stakes fraud prosecutions.
Our specialist solicitors will assess the strength of HMRC’s case, protect your rights at every stage, and develop a robust strategy – whether that means challenging the basis of the investigation, negotiating a civil settlement, or preparing a defence in court. We also work closely with leading tax counsel and forensic accountants to ensure no detail is missed. The sooner we are involved, the greater the chance of containing the damage and protecting your interests.
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