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What happens in an HMRC fraud investigation?

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Learning that HMRC are investigating you for fraud is likely to be a very scary situation and it is important to realise that there can be very serious penalties. Understanding the situation you are facing and getting the right legal support are both essential to help minimise the risk of the most serious penalties.

Here, we discuss what an HMRC fraud investigation is, how you might know if HMRC are investigating you, what happens during an HMRC investigation, the different types of HMRC fraud investigations, how HMRC calculates penalties for fraud and who the HMRC Fraud Investigation Service Unit are.

While we hope this information is useful, please note, it should not be taken as legal advice. If you need legal support with an HMRC fraud investigation, then please get in touch and our team can advise you.

Please note that out team do not provide legal support in relation to HRMC investigations for allegations of straightforward tax fraud or tax evasion.

What is an HMRC fraud investigation?

HMRC (His Majesty’s Revenue and Customs) is the government body responsible for the collection of taxes from both individuals and businesses in the UK. They are also one of the bodies responsible for investigating any suspected instances of fraud.

HMRC criminal investigation powers are likely to be called upon if HMRC criminal investigators believe you are guilty of:

  • Tax fraud or tax evasion
  • VAT Fraud
  • Cheating the public revenue
  • Taxation fraud related to crime or organised crime
  • Making false financial statements or providing false, dishonest or forged documentation
  • Fraud by false representation
  • Deception, concealment, conspiracy or corruption
  • The illegal importation or exportation of goods (e.g. the evasion of customs duties usually drugs or valuable gold or diamonds)
  • Money laundering
  • Any previous taxation related offences
  • Furlough Fraud
  • Payroll Fraud

They have their own fraud investigators and may also work with other organisations, such as the police and Serious Fraud Office (SFO).

How do you know if HMRC are investigating you?

The first sign of HMRC investigating for fraud is normally that they have requested more information from you about your finances. This might be with respect to a particular element of a tax return or wider activity. This does not necessarily mean that you are being investigated for fraud, but if you have any concerns about your affairs, it should be an alarm bell.

You may also be notified by the HMRC Fraud Investigation Service Unit that they are launching a tax investigation into you or your business. This is something you should take extremely seriously and you should immediately seek expert legal advice.

What happens during an HMRC investigation?

There are various stages that may occur during an HMRC investigation:

  1. HMRC requests more information from you. You are legally required to provide this information to the best of your ability. It is advisable to speak to a solicitor at this stage if you have any concerns about your affairs and they can advise you on how best to respond.
  2. Undercover investigations. Sometimes HMRC work undercover by making ‘test purchases’ posing as ordinary customers. They may also be making note of information such as how busy a business is on a particular day. They can then compare this against financial records of the business to see if the records seem consistent with what the undercover investigators observed.
  3. HMRC launches a formal investigation. If they are not satisfied with the information you have provided, then HMRC may investigate further, for example, looking at your lifestyle and financial activity to see if this seems consistent with what you have reported.
  4. You are invited to an interview with HMRC officers. You should take a legal representative with you when attending such an interview.
  5. You are informed that you must pay additional tax. This means that HMRC believes that you have not, but it does not necessarily mean that they believe you have committed deliberate fraud. Criminal charges will not automatically follow unless HMRC believes the underpayment was deliberate or criminally negligent.
  6. You are charged with an offence. If HMRC believes there is sufficient evidence to suggest that you have committed fraud, then they will charge you with the relevant criminal offence.
  7. Court proceedings. HMRC can act as a prosecuting agency, launching court proceedings against you. Your options here may include admitting the offence in the hopes of receiving a lesser penalty or fighting the charges in court.

In serious cases, It is also important to note that HMRC may have the authority to raid your house or business with warrants.

The arrival of investigating officers armed with a warrant to search your premises will usually be the first indication that you or your business is under criminal investigation.

So-called ‘dawn raids’ are becoming increasingly common as regulators and enforcement agencies including HMRC and the Serious Fraud Office (SFO) use their powers to enter premises to search and seize material deemed relevant to their investigation.

What are the types of HMRC fraud investigations?

There are three types of investigation HMRC may carry out:

  • Full: Involving a thorough examination of an individual’s or business’s financial records looking for signs of wrongdoing.
  • Aspect: Looking into a specific area of concern in relation to a person’s financial and tax records or those of a business.
  • Random: Routine checks carried out on random businesses and individuals where there is no particular reason for concern.

How does HMRC calculate penalties for fraud?

The nature of the penalty handed out for HMRC fraud largely depends on the offence that is being investigated.

If HMRC initiates criminal proceedings for fraud, including furlough, payroll and VAT fraud, you could also face a fine and, potentially, a prison sentence.

Given how substantial HMRC penalties for fraud can be, it is absolutely essential to seek expert advice at the earliest possible opportunity.

Who are the HMRC Fraud Investigation Service Unit?

HMRC’s Fraud Investigation Service (FIS) is a specialist unit responsible for investigating serious tax evasion, tax fraud and excessive tax avoidance. FIS investigates both individuals’ tax affairs and those of businesses.

Credit for guilty plea

In short, where a guilty plea is indicated at the first stage of proceedings, you could receive a reduction from 1/3 of penalty.

More information regarding the potential outcomes for indicating a guilty plea can be found here.

Should I speak to a solicitor about an HMRC fraud investigation?

HMRC investigations can be very worrying and complicated to deal with, so it is always sensible to get expert legal advice as soon as possible. You are legally required to assist with the investigation, but it is important to be very careful about what you disclose as this can seriously affect your defence options later. This is where a solicitor can help.

Given the complexity of HMRC fraud investigations, it is a good idea to work with a criminal defence team with specific experience in these types of cases. This helps to ensure that you get the very best advice tailored to your circumstances and that you have the best chance of securing a positive outcome.

At JD Spicer Zeb, our expert criminal defence solicitors have more than 45 years of specialist criminal defence expertise and are Law Society accredited in Criminal Litigation. This means we are ideally placed to support you if you are being investigated for fraud by HMRC.

Related offences

Please note that our expert solicitors also provide advice and support with various related offences, including:

Fees and funding

We are transparent on costs at all times, no matter your circumstances.

If you need to attend court, legal aid public funding will be available in some cases, based on the seriousness of the case justifying the grant of public funding.

For clients who do not qualify for legal aid public funding, the alternative option will be to fund their case privately.

To find out more about the way we handle fees (both legal aid public funding and private fees), please use the links provided below:

Speak to our criminal lawyers today

If you are due to attend the police station for interview for allegations of HMRC fraud, or require any urgent specialist advice, immediate representation, please do not hesitate to get in touch.

You can contact our specialist criminal defence lawyers in London, Birmingham and Manchester by telephone on:

Or email: solicitors@jdspicer.co.uk

Alternatively, you can fill out our quick online enquiry form, and we will get back to you quickly.

24/7 legal representation for HMRC fraud investigations

Please get in touch for a free consultation with one of our expert criminal defence solicitors, as well as immediate representation and advice for cases of HMRC investigation for fraud.

We are available to represent clients all over England and Wales at any time, so please contact our Emergency Number at 07836 577 556.

How can we help?

Common questions

We always work with the most experienced and best leading UK barristers, KCs (Kings Counsel). We cover all criminal cases 24/7 at the police station and court. Offices in London, Birmingham, and Manchester cover cases across England and Wales. We can offer Legal Aid and affordable Private fee agreements. We can see you the same day, including virtually. Our Senior Partners supervise all of our cases.

How quickly do you respond?

We respond quickly even during out of hours. We do not get our work by paying for online adverts but based on the fact that few criminal law firms can match our 45 years of experience. Most of our cases are still from word-of-mouth recommendations from satisfied clients. We are called daily by dissatisfied clients from firms with less experience than us. We respond very quickly to new enquiries. We know what clients seek and so we update clients rapidly.

Can you get cases dropped?

Yes, read about the recent cases we've helped our clients with here.

We always keep you updated and give straightforward advice. We will get cases dropped early where the case is weak or should not be prosecuted. We will be upfront with you about where you can benefit from a good result with an early guilty plea, such as a discount on your sentence. As we work on cases across all levels with clients from all walks of life, we are excellent at giving clear, spot-on advice. As an established firm, we can allocate a whole team to your case often at short notice to secure evidence to minimise the damage to you. 

Have you won any awards?

OUR PROFESSIONAL BODY THE LAW SOCIETY AWARDED US IN OCTOBER 2020 WITH THE EXCELLENCE IN CLIENT SERVICE AWARD AND STATED - 

"JD Spicer Zeb demonstrated a clear commitment to client service through their work with vulnerable and diverse individuals in what can be severely traumatic circumstances".

Do you offer free consultations?

Where it is possible, we aim to provide an initial consultation to you. If we can speak to you, we can if required inform you about  –

  • Whether we can take the case on and our relevant experience.
  • Public and private funding benefits.
  • Assistance in applying for legal aid where we are likely to accept instructions.
  • An outline of options in police interview only. We will not advise you on which option to adopt.
  • Providing our free written guide explaining the police station process.
  • The gravity of routine and day-to-day offences you face.
  • Consequences of not attending the court or police station.
  • Consequences of interfering with any witnesses.
  • Retaining any evidence in support of your case.
  • If possible an outline of the elements of the offence that the police or CPS must prove.
  • This consultation will normally be by telephone or email and will only be for as long as we deem necessary to establish if we can act for you. If we cannot usefully give you any advice in this manner then we will not continue with the consultation. We will not discuss the case in depth for you to be able to decide on your plea or any significant aspect of the case, as this cannot be undertaken informally.
  • Referring you, if possible, to other firms for matters out of our specialism or if we cannot help.

Consultations do not apply to the following cases –

  • If we do not intend to take the case on.
  • Road Traffic cases, drink driving, drug driving, driving bans, speeding, no insurance, mobile phone use, points etc.
  • In all cases where we do not have the capacity to take your case or the availability of suitably qualified staff to provide an initial free consultation. This is applicable in all cases but especially where a more senior lawyer is required because of your personal needs or the complexity of the case.
  • Harassment/stalking/ coercive behaviour/malicious communications or road traffic cases and most sensitive cases. These cases are often too complicated to assess in short consultations.
  • The locations concerned may be too distant to represent you adequately or it may not be cost-effective for you or us.
  • The case is too complicated to assess or raises various charges or facts, complexity, or history to be considered informally or in a short consultation.
  • In most Legal aid transfers where legal aid is granted to another firm except in very grave cases, we may assess the case and merits for a transfer.
  • If your relationship has broken down with your existing solicitor or several solicitors.
  • If you have been released under investigation and have already had a police station attendance. 
  • If you hold legal aid with another firm and seek a second opinion.
  • If you are calling on behalf of the client as a friend or family member unless you have full authority and full facts.
  • To businesses.
  • Advising whether you were given good advice by your other solicitor.
  • Whether to decide to plead guilty or not guilty.
  • Whether you have an arguable defence in law or factually complicated defences.
  • Any advice you have had after your first court appearance.
  • Any advice on appeal on conviction or sentence.
  • If we feel we are unable to communicate with you.
  • If we are likely to be conflicted or breach our professional rules.