HMRC Tax Investigation Solicitors
If you or your business needs assistance in responding to a tax fraud investigation or a tax inquiry by HM Revenue & Customs (HMRC), the expert team of specialist tax investigation solicitors at JMW is here to help.
Our Business Crime and Regulation team has years of experience dealing with tax investigations and will help you resolve the situation efficiently and effectively, while also taking the necessary steps to protect your reputation or that of your business and its clients. We have extensive knowledge of this area of the law and a track record of success in supporting organisations through these investigations.
How JMW Can Help
Whether it is you or your business that is under investigation, our specialist HMRC tax investigation solicitors are here to help you. Our services include:
- Specialist tax investigation advice, assistance and representation
- Immediate response to dawn raids, arrests and interviews under caution
- Conducting comprehensive and carefully managed disclosure to HMRC to help avoid criminal investigations
- Representing you should any prosecution be brought for tax fraud
- Converting criminal tax fraud investigations/prosecutions to civil proceedings where possible
- Challenging restraint orders
- Challenging confiscation proceedings
- Assistance with Unexplained Wealth Orders (UWOs)
- Assistance with account and asset freezing orders
- Appeals in relation to VAT and/or personal tax to the Tax Tribunal
Our Business Crime and Regulation team will strive to minimise the financial implications and stress associated with the tax investigation process, along with the significant amount of paperwork that comes with it.
Our solicitors are available on a dedicated 24/7 helpline to ensure we can react as quickly as possible to minimise the implications of an HMRC tax investigation on you and your business.
We also work closely with an extensive network of independent tax consultants, forensic tax accountants and specialist tax barristers, all of whom are able to provide additional tax investigation advice on complex cases.
What are HMRC Tax Investigations?
As the governmental body overseeing tax legislation, HMRC has the capability to launch criminal investigations when a business is suspected of engaging in tax evasion, VAT fraud or tax fraud.
Standard tax inquiries are non-criminal in nature and can be dealt with on a civil basis, avoiding criminal sanctions. However, if the level of fraud or suspected fraud involved meets certain conditions, HMRC will escalate their investigation from a civil case into a criminal investigation, such as when:
- HMRC is looking to send a strong deterrent message
- When the conduct involved is such that only a criminal sanction is appropriate
If found guilty after a criminal investigation, the convicted parties will face steep financial penalties and, in some circumstances, time in prison.
What Records Might HMRC Ask For?
The type of records HMRC might ask for will depend on the nature of the investigation, but could include any of the following:
- Bank statements
- Payroll records
- Credit card statements
- Sales invoices
- Expense receipts
- VAT records
- Quotes from third parties
- Copies of emails and correspondence
How Far Back Can HMRC Investigate?
If only minor adjustments to your tax return are necessary, HMRC may not investigate previous returns. However, if larger adjustments are required, then tax returns from earlier years are likely to be looked at.
Generally, if the investigation was triggered by a careless error, then a maximum of six previous years can be looked at in the settlement. However, if the error is deemed to be deliberate, then HMRC has the power to go back 20 years.
What are HMRC Tax Investigation Penalties?
If an HMRC investigation determines that you owe additional tax, you will be liable for a penalty. The severity of this will consider the reason for the error, which could include:
- Mistakes or misinterpretations
- Failure to take reasonable care
- Deliberate understatement
- Deliberate understatement and concealment
If it is clear that you have made a genuine mistake with your return, then the penalty will be less severe than if you have deliberately falsified the return. In these instances, it is likely that you will simply be asked to pay the remaining tax within 30 days of the decision, potentially with interest added.
A deliberate underpayment will lead to a higher penalty. Typically, this could be anywhere between an extra 15% to 100% on top of your payment, but the figure could go up to 300% in severe cases.
In the most serious situations, a criminal prosecution might be brought. Under these circumstances, it is advisable to contact a specialist solicitor for help and advice.
What Business Taxes Does HMRC Investigate?
HMRC does not limit itself to investigating only income tax. Other types of business taxes that can be investigated include:
- Corporation tax
- Insurance premium tax
- Climate change levies
- Landfill tax
- Capital gains tax
- Construction industry schemes
How Long Do HMRC Tax Investigations Take?
There is no time limit on how long HMRC has to complete a tax investigation, meaning the process could take weeks, months or years for more complex cases.
The duration of the process will depend on a number of factors, including the scope and gravity of each individual case, the nature and extent of HMRC’s concerns, and the conduct of the accused during the case.
What Should I Do If HMRC Turns Up at My Premises with a Search Warrant?
HMRC has the power to enter premises to search and seize property. However, it is important to seek advice from a legal representative with the relevant experience when this happens, because HMRC can sometimes exceed their powers. Challenging the exercise of these powers is often crucial in defending your legal rights.
For more advice on how you can protect your position, check out our guidance on HMRC dawn raids.
If Requested to Attend an Interview, Do I Need to Attend?
HMRC often invites individuals under investigation to attend a "voluntary interview", rather than relying on the powers of arrest. Although you do not have to attend, a refusal could put you at risk of being arrested.
Deciding whether to attend an interview may require expert judgement, and careful preparation for voluntary interviews can make a very important difference to the outcome of the investigation or any criminal proceedings. JMW’s tax investigation solicitors can guide you through the pre-interview process, the interview itself and any resulting action required to protect your position.
What Happens If I am Prosecuted?
If you are being prosecuted over a tax investigation issue, you should immediately instruct an experienced solicitor to advise you on what action to take in your particular circumstances. Doing so will be essential if you are looking to challenge the prosecution case, properly exercise your legal rights and mitigate the indirect commercial or personal impact of prosecution.
At JMW, we can provide expert guidance to help you build the strongest possible defence case, assist with reputational management, corporate restructuring and other services from our various departments. Different funding options are available, and we can organise a no-obligation discussion to set out your options.
What Triggers an HMRC Investigation?
An investigation by HMRC is usually triggered when figures submitted on a return appear to be wrong or unusual in some way - for example, if a small company suddenly makes a large claim for VAT, or a business with a large turnover declares a very small amount of tax.
However, there are other incidents that could lead to a business coming under investigation, including:
- HMRC receiving intelligence or a report
- Working in a high-risk industry - for example, one that regularly takes cash payments
- Having a large increase in costs or drop in income
- Significant inconsistencies between different returns
- Repeatedly filing your tax returns late
- Costs that are larger than the industry norm
- Tax returns appearing to be inconsistent with your standard of living
- Being in a sector that HMRC has decided to target
- Trading in non-tangible products
How Do Unexplained Wealth Orders Work?
Unexplained Wealth Orders (UWOs) came into force in January 2018 to help authorities identify and seize property suspected to have been bought by laundered criminal funds, most commonly from foreign sources.
To find out more about what a UWO entails and what could happen if you were to become subject to one, check out our UWO factsheet.