There is no doubt that the creation of HM Revenue & Customs (HMRC) from the former HM Customs & Excise and Inland Revenue in 2005 led to an initial reduction in the number of attacks on non-compliant businesses. However, rumours of the demise of this type of action on the part of HMRC appear to be ill-founded.
HMRC is now expanding and enlarging its efforts to prevent, investigate and punish those failing to comply with tax laws. By way of example, Chancellor Alistair Darling recently agreed to increase the number of investigators in HMRC’s Special Civil Investigations (SCI) division to focus on investigating offshore tax havens and complex trust arrangements, as well as using its increased resources to investigate ‘marketed avoidance’ schemes and to focus on labour providers.
In conjunction with HMRC’s Large Business Service, SCI is also investigating ‘high risk’ corporates and has expanded its civil investigation of missing trader VAT fraud, contrived insolvency and transfer pricing. It is also known to be investigating a number of cases involving bank account information obtained from Liechtenstein, and in fact, UK nationals holding accounts in one particular bank in Liechtenstein will already be the subject of investigation by HMRC.
The more serious cases of non-compliance are being investigated by HMRC’s Criminal Investigations Division, which has also undergone a number of changes including the formation of ‘multi-functional teams’ to investigate those suspected of being involved in a wide range of tax fraud.
Furthermore, a new Criminal Taxes Unit has been formed to work closely with other agencies such as the Serious Organised Crime Agency to investigate cases involving allegations of wider and more complex criminality. HMRC is also liaising closely with the Metropolitan Police following the raid on a number of safety deposit boxes in London as part of Operation Rize.
HMRC’s recent efforts to tackle non-compliance have certainly borne fruit. The Offshore Disclosure Facility has led to over 30,000 monetary disclosures being made and has brought in an additional £400 million in undeclared tax. Investigators are continuing to look closely at those that made disclosures and those that didn’t. Since the facility did not give any immunity from potential prosecution, it will be interesting see how HMRC’s investigations will progress.
So, it is fair to say that HMRC’s fraud investigation teams are alive and well and, over the coming months and years, practitioners and their clients might well feel its renewed vigour in this area. If they do, specialist professional help is a must.
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