Given the massive loss of revenue to HMRC arising from financial fraud involving the evasion of VAT on goods and services, HMRC is vigilant in conducting investigations against any business or individual suspected of VAT fraud.

Whilst a minor case may result in a convicted person receiving a term of Community Service, a conviction for serious tax fraud carries onerous consequences including a hefty fine, a lengthy prison sentence and, possibly, both.

Sentencing Guidelines set out in detail appropriate punishments according to the convicted person’s level of culpability and those convicted of substantial fraud as part of a conspiracy to defraud can expect to receive a very long term of imprisonment.

Irrespective of the consequences arising from a conviction following prosecution, the very existence of an allegation of fraud may lead to dire consequences such as a raid on a company’s business trading premises, the arrest and interview of business owners and staff, the freezing of bank accounts and restraint orders against property, all of which may wipe out a company’s trading goodwill, however many years it has taken to develop.  

The team at Kangs Solicitors has vast experience and is highly regarded nationwide for assisting clients facing allegations of wrongdoing of every nature, including those involving evasion of VAT.

Our team is led by Hamraj Kang who is recognised as a leading expert in the area of financial and tax fraud. He is one of only two solicitors nationally to be ranked as a ‘star individual’ for six consecutive years in the legal directory Chambers & Partners.

Other members of the team are ranked in the Legal 500 and also ranked in Chambers & Partners.

For an initial no obligation discussion, please call our Team at any of our offices detailed below:

The Requirement to Register for VAT | Kangs HMRC Solicitors

  • Where the VAT taxable turnover of a business exceeds the registration threshold, registration is compulsory.
  • Where the VAT taxable turnover is less than the given threshold, there exists an option to register for VAT voluntarily which step is beneficial, especially where goods are zero-rated as this enables VAT to be reclaimed on purchases.
  • Currently, the registration threshold is £85,000 or more during any twelve months period. Once this threshold is reached, registration must be made thirty days from that date. 

Procedures | Kangs VAT Investigation Solicitors

Issue of a Notice

This frequently happens when HMRC suspects that VAT is being evaded in circumstances where the trading activity of a business is being conducted where, inter alia:

  • it is not registered for VAT,
  • an invalid or incorrect VAT number is being used,
  • cash payments are being received, whether made on all or some services,
  • payments are being made to third parties,
  • an unusual spike in VAT repayments appears,
  • there exists a poor history of VAT compliance.

PN 160 VAT Investigation

  • An investigation of this nature is commenced when HMRC has strong evidence leading to the suspicion of fraud.
  • HMRC will offer a disclosure meeting where the opportunity will be given to make a full and frank disclosure of any VAT fraud which has been conducted.
  • Taking advantage of this disclosure opportunity will prevent the issue of a criminal prosecution and potential prison sentence.

Code of Practice 9 (COP 9) Investigation

  • HMRC issues such an investigation when it suspects that fraudulent activity has resulted in serious loss of tax revenue.
  • COP9 investigations are the most serious type of investigation undertaken by HMRC.
  • HMRC will issue a Contractual Disclosure Facility offer (CDF), which offers the opportunity to disclose any tax not paid by deliberate evasion.
  • The CDF allows sixty days for acceptance or rejection of the offer. HMRC does not disclose its evidence.
  • Full acceptance, which will lead to immunity from criminal prosecution, requires:
    1. an admission of deliberate behaviour,
    2.  disclosure of all omissions, errors or irregularities,
    3. cooperation with HMRC.
  • If any matters are not disclosed and are subsequently discovered by HMRC, the consequences will be serious.

VAT Visits and Inspections

Whilst HMRC is entitled to conduct any visit without appointment, seven days’ Notice will generally be given for a standard and routine inspection.

Details will be given of the information sought together with a time estimate for the meeting.

VAT officers may look for the following records: 

  • till rolls,
  • business diaries,
  • sales and purchase invoices,
  • bank statements,
  • accountants’ working papers and annual accounts,
  • accounting software

HMRC conducts Compliance Checks at which VAT officers inspect all VAT records to ensure that the right amount of VAT is being paid or reclaimed.

Where appropriate, they identify any additional tax to be paid and any penalty arising from failure for not having paid the correct amount.

How Can We Assist? | Kangs Financial Fraud Offences Defence Solicitors

Whenever HMRC issues any form of Investigation, arranges a visit to your premises, whether upon Notice or otherwise, or you become aware of any potential failings in the manner in which you or your business accounts for any form of tax, including VAT, you should immediately seek expert guidance and advice.

The consequences for failing to assist HMRC or any form of fraudulent activity, vary from fines, which can be substantial, through to criminal prosecution which, upon conviction, may well lead to a term of imprisonment. 

Kangs Solicitors fields an experienced Team accustomed to assisting clients deal with HMRC, in both civil investigations and criminal investigations, which is ready to help and support you.

Our Team will advise you on the most appropriate manner in which to handle the situation with which you are confronted.

Contact:

Please do not hesitate to contact our Team through any of the following:

Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888

John Veale
jveale@kangssolicitors.co.uk
0121 449 9888 | 020 7936 6396 | 07989 521 210

Tim Thompson
tthompson@kangssolicitors.co.uk
0161 817 5020 | 020 7936 6396