When HM Revenue & Customs (HMRC) was created in 2005, it inherited a number of differing powers to check the accuracy of tax, VAT and other Returns. Between 2005 and 2010, HMRC sought to align its compliance and investigation powers (where possible) and introduced the concept of a “Compliance Check” investigation.
HMRC also have two “Codes of Practice”, under which they investigate what they would perceive to be more serious or deliberate tax irregularities. These are known as Code of Practice 8 and Code of Practice 9.
Finally, at the most serious end of the spectrum, HMRC may commence a criminal investigation. They may do this, seemingly, out of the blue, or they may seek to prosecute during the process of an on-going enquiry or civil investigation.
If you have not yet been approached by HMRC and you wish to discuss making a voluntary disclosure in order to mitigate potential penalties and take control of the situation, please visit our tax disclosures page or give us a call on the number above and one of our specialists would be delighted to discuss the best route for you.
Compliance Check investigations – what powers do HMRC have?
Under the new legislation, HMRC can enquire into your tax affairs by way of a compliance check.
If HMRC commences a compliance check into your personal or business tax/VAT affairs then you should consider whether you feel comfortable dealing with HMRC on your own or, as an adviser, whether you would appreciate specialist assistance.
HMRC have the power to request documentation directly from you and also from third parties. They can visit your home and/or business premises and can insist on seeing your records.
It is always in a client’s best interests to chat matters through with a specialist if they receive a notice of enquiry from HMRC – even if you have no discrepancies to disclose, the right help at the right time can ensure that a potentially long, drawn-out process is effectively managed, concluded and that HMRC do not obtain information they were not entitled to.
Read more about compliance checks and what Lancaster Knox can do to help you or your client here.
Codes of Practice 8 and 9 investigations- what are they?
HMRC use their code of practices in order to investigate what they would perceive to be more serious or deliberate tax irregularities. Of the two, Code of Practice 9 (COP9) is the more well-known.
COP9 is the procedure by which HMRC investigate suspected serious tax fraud. If you or your client receive a COP9 notification letter, it is extremely important that you consult with a specialist as there are very strict time lines which must be adhered to in order to ensure that you/your client are best protected.
Code of Practice 8 (COP8) is the procedure by which HMRC can investigate suspected tax fraud and bespoke avoidance. It is important to take any notification of HMRC proceeding on this basis very seriously as, unlike under the COP9 CDF process, there is no protection from criminal prosecution.
Read more about what Lancaster Knox can do to help you or your client COP8 and COP9.
Criminal investigations –what can I do?
If you or your client have received a notification that HMRC are commencing a criminal investigation, or you suspect that they are looking to prosecute based on information obtained or your perceived lack of cooperation in respect of a civil enquiry/investigation then we would urge you to get in touch immediately.
It is imperative that matters are handled carefully and that the right specialists get involved at the right time in order to protect the taxpayer’s best interests, mitigate the likelihood of a successful prosecution and minimise potential reputational damage.
With the Corporate Criminal Offence for perceived facilitation of tax evasion by an associate of the business now in effect, we expect to see more criminal prosecutions going forward.
Read more about criminal investigations and what Lancaster Knox can do to help you or your client here.