HM Revenue and Customs Offences

HM Revenue and Customs are one of the most powerful bodies investigating crime and tax evasion.

They investigate matters such as:

  • Missing Trader Intra Community (MTIC) fraud
  • Money Laundering
  • False Accounting
  • Cheating the Revenue
  • Tax evasion
  • Civil Settlement
  • Penalties for incorrect returns
  • Tax amnesty
  • How can we help?

 Tax evasion

If you are aware that you are under investigation, you should contact us at your earliest opportunity for expert advice.

Solicitor or Accountant?

If you are considering instructing an Accountant or a Solicitor, you should be aware that information you provide to your Solicitor enjoys a special status called legal privilege. Your Accountant cannot provide this protection, although they may be able to gain it if they are instructed by a Solicitor. If there is to be an assessment of the Tax due and a Report prepared about your Tax affairs, we can instruct an Accountant on your behalf.

How will I know if the Revenue will consider bringing criminal charges against me?

The following are indicative factors of an investigation being treated as a criminal investigation:

  • You are invited to attend a formal interview
  • The Investigating Officer is from the SCO (Special Compliance Office)
  • The word “caution” or the words “you do not have to say anything…” are used:
  • If you are a professional, e.g. a Solicitor or an Accountant
  • If you have been involved in creating false documents
  • If there is an allegation of a long term evasion of tax
  • The Investigating Officers have obtained a warrant to search your premises
  • It is alleged that you have mislead HM Revenue and Customs

Civil Settlement

It is often possible to arrange to settle Tax debts without the involvement of the Criminal Courts in a civil settlement. If Tax is settled on a civil basis, in addition to the Tax due, there will be interest on the outstanding Tax and a penalty. Penalties are negotiable and there are discounts for mitigating circumstances such as full co-operation.

Penalties for incorrect returns

Legislation is pending in the Finance Bill 2007 to introduce a single new penalty regime, for incorrect returns for income tax, PAYE, national insurance contributions, corporation tax and VAT. The changes should mean that:

  • There will be greater incentives to voluntarily disclose understatements
  • Maximum and minimum penalties will be at set rates
  • Genuine mistakes should not attract penalties

New criminal investigation powers for HM Revenue and Customs

Historically the Inland Revenue did not have powers of arrest, which Customs and Excise enjoyed for many years. Therefore if arrests or warrants were required the Revenue had to involve a police constable. However the Finance Bill 2007 proposes the introduction of arrest powers for all officers of HM Revenue and Customs, based on the provisions of the Police and Criminal Evidence Act (PACE). This is likely to lead to a significant number of arrests by HM Revenue and Customs once this legislation is in force.

Tax amnesty

In an exceptional move, the Revenue have announced that they are offering a tax amnesty known as ‘Offshore Disclosure Facility’ to anyone who holds, or has held, an offshore bank account and who has undisclosed tax liabilities relating to that account.

The tax amnesty will be for only a limited period and there are a number of deadlines for those who wish to take advantage of this opportunity:

  • 22nd June 2007 – deadline by which individuals are required to inform Revenue and Customs that they intend to make a disclosure
  • 26th November 2007 – deadline by which individuals are required to make full disclosure
  • 26th November 2007 – deadline by which payment of the tax, interest and penalties must be made

What are the advantages?

Under the Offshore Disclosure Facility, any individual who makes a disclosure will face only a limited penalty – only 10% of the total of the tax owing. There will be no penalty on untaxed income of less than £2,500.00. However, the full amount of interest on the tax owing will be charged.

For those who do not capitalise upon the opportunity offered by the tax amnesty, Revenue and Customs have indicated that they will investigate those who hold offshore bank accounts and undeclared tax liabilities, but who have chosen not to make a disclosure. They have stated that a “vigorous campaign will be waged”.

The Revenue has already contacted high street banks – Barclays, Royal Bank of Scotland, Lloyds TSB, HSBC and HBOS who have had to provide them with information regarding individuals who hold offshore bank accounts. It is believed that smaller banks and institutions will be approached next.

How can we help?

  • RNBDS can assist in negotiating the repayment of any undisclosed tax liability with Revenue and Customs.
  • We can also attend any inspections, searches or interviews.