A Guide to Tax Investigations by HMRC
HMRC appear to be more pro-active than ever before and are investigating many individuals and businesses with a view of collecting further tax.
Just because an individual or business has received the dreaded brown envelope from HMRC and has been put on notice of a possible investigation against them, it does not mean that wrong doing exists.
It is therefore imperative that legal representation is sought to enable a swift and favourable conclusion.
The Different Types of Tax Investigation
If HMRC suspect that there is deliberate attempt to pay less than the correct amount of tax or indeed use of a scheme or device with the aim of reducing or avoiding liability that might otherwise be due, they will be sure to carry out an extensive investigation against you.
Over and above our expertise in Criminal Tax Investigations, we are also instructed on the following types of tax investigation:
- Code of Practice 8 (COP8)
- Code of Practice 9 (COP9)
Code of Practice 8
Although HMRC commence these investigations, they say, without criminal prosecution in mind but with a view of working towards financial recovery, it is imperative that you seek advice as early as possible from our Tax Investigation Solicitors to ensure that you are given the best chance of limiting your exposure.
What Does COP8 Involve?
This is an investigation conducted generally by the Fraud and Bespoke Avoidance section of the Special Directorate of HMRC.
If there is suspicion of a tax loss to HMRC, through what they would refer to as a tax avoidance scheme, they will look into the affairs of:
- Individuals
- Partnerships
- Companies
- Trusts
They often involve a contention by HMRC as to the status of residence of the individual in the UK and/or status of interests in foreign entities.
HMRC will look into all the taxes. This is done by initially looking at the information in tax returns, accounts and statements and any other sources that they have available to them.
During the course of the investigation, if you decide to co-operate or indeed if we advise you to do so, then you may be subjected to meetings with HMRC and/or visits from HMRC to your business premises.
Further, HMRC can request examination of your business and private financial records. This can be arranged at either your premises, HMRC premises or at our offices.
We are here to help
These matters will more often than not, be contentious and complex in nature.
Individuals and businesses are usually best served by instructing a specialist team of solicitors to assist in responding to the HMRC investigation.
We at Kangs have a team of lawyers that are regularly instructed on these matters and have extensive experience in dealing with HMRC.
Code of Practice 9
This is effectively the first step for HMRC before a determination is made as to whether they should initiate criminal proceedings.
The Commissioners of HMRC reserve the right to pursue a criminal investigation.
It is imperative in COP9 investigations that you engage specialist tax fraud solicitors to try and prevent a criminal investigation from being pursued.
We are here to assist you limit your tax exposure and to protect your interests.
Contractual Disclosure Facility (CDF)
COP9 proceedings provides the tax payer with an opportunity to make a complete and accurate disclosure of their ‘deliberate’ and/or ‘non-deliberate’ conduct that has led to irregularities in their tax affairs.
This is completed by way of a contractual arrangement called a Contractual Disclosure Facility (CDF).
Essentially it is immunity from criminal prosecution if HRMC are satisfied that full disclosure has been made.
If the taxpayer accepts the CDF, they will usually proceed to accept the under declaration of tax and agree to fully co- operate with HMRC. In return there is no criminal prosecution.
The CDF offer that is extended to you expires 60 days following receipt therefore time is of the essence.
If HMRC form the view during the COP9 investigation that the tax payer is not making complete and accurate disclosure, the CDF can be withdrawn by HMRC and this will then expose the tax payer to a possible criminal prosecution.
How We Can Assist You
These tax investigations are often of a complex and technical nature and need to be handled correctly and efficiently. HMRC will not normally disclose the specific suspicions but will seek general and wide disclosure from you. The ball is in your court as to whether to make disclosure or not.
There are various tactical considerations when the issue of making disclosure to HMRC is being considered. Experienced legal representation is certainly an advantage. If you instruct Kangs Solicitors at the earliest possible stage, it provides you with the opportunity of benefitting from our experience of conducting such tax investigations.
In our experience many such investigations can be concluded and determined quickly thereby avoiding criminal prosecution.
HMRC documents, on both COP8 and COP9, can be found using the following links:
How Can I Contact For Help And Advice?
Please feel free to contact our team of lawyers with a proven track-record in conducting HMRC tax investigations on behalf of tax payers, whether civil or criminal, through one of the following:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
