Advice on HMRC Tax Investigations and Prosecutions

Prosecutions relating to tax show no sign of slowing. The present appetite for taking action perhaps has roots in the last financial crisis or the shifting attitude toward those who seek to gain an advantage from bending and manipulating or deliberately breaking tax laws: No government wants to be seen to be lax toward tackling tax fraud if the public purse has a hole in it.

HMRC recently voiced its desire to alter the perception that tax-related offences are victimless crimes, describing it as ‘stealing money from our vital public services’ and ‘undermining honest traders.’

What exactly is a HMRC prosecution and how can it affect you or your business? Ian Anderson, Partner and Head of Regulatory Law and Complex Crime, takes a closer look.

Which types of conduct are prosecuted under this heading?

HMRC is given responsibility for dealing with a wide range of cases by way of its in-house Fraud Investigation Service. Very often, charges are brought under the offence of Cheating the Public Revenue. As an offence, this isvery wide in scope- including (but not limited to) the following circumstances:-

  • Failing to Disclose Income;
  • Failing to Account for VAT;
  • Delivering, or causing to be delivered, a false document relating to Income Tax;
  • False Statements relating to Income Tax, be this in writing or otherwise

It does not need to be shown that the offender made gains as a result of their conduct, nor do HMRC need to demonstrate that they suffered an actual loss, rather, the focus will be on the offender’s intentions, and whether those intentions were honest or dishonest.

What are the courts’ sentencing powers in these cases?

Theoretically, the maximum punishment for Cheating the Public Revenue is life imprisonment. In practice, this is unlikely to be imposed- but a significant period in custody can still result. The applicable Sentencing Guidelines recommend 3-17 years, dependent upon the severity of the offending.

Not just a prison sentence…

It may not just be a matter of facing action for tax fraud alone; the same set of facts can see charges in relation to a whole host of associated offences:-

  • Money Laundering;
  • False Accounting (under the Theft Act 1968);
  • Conduct Amounting to an Offence, Making a False Statement for VAT purposes and other related offences under the VAT Act 1994.

Action under the Proceeds of Crime Act and the disqualification of directors may also ensue, so there is plenty at stake.

Beware the restraint order…

It is very common in tax fraud cases for a restraint order to be imposed. A restraint order is a court order freezing assets including bank accounts, vehicles and property. A restraint order is often granted without notice and the effects of being restrained can be wide ranging and highly damaging to a business or an individual. Ison Harrison are experts in lifting, varying and advising on restraint orders.

Expert representation is always essential, and HMRC-led prosecutions are no exception. When businesses are searched, items seized and employees interviewed, worry and uncertainty can set in. The scope of the prosecution and the interference with business, professional and personal lives can be exceptional, so please contact Ian on 0113 284 5062 to secure the assistance you or your company needs.

At present the regulatory team are dealing with cases involving, false accounting, money laundering, conspiracy to defraud and conspiracy to cheat the public revenue