The recent merger between HM Customs & Excise and the Inland Revenue will in the near future result in joint tax investigations involving suspected serious tax fraud being carried out by the new revenue department, H M Revenue & Customs (‘HMRC’).
Previously each department operated under its own procedures for dealing with cases of tax evasion, where the emphasis was on seeking cooperation from the taxpayer by the making of a disclosure of the tax evaded. This approach will continue in the new department, and a statement of practice, Code of Practice 9 (2005) was issued recently setting out how an investigation will be conducted.
A civil penalty will usually be imposed on the business and possibly also to the individual(s) responsible for the evasion, for example, one or more partners or directors in the business. The penalty will be based upon the level of cooperation provided by the taxpayer, once the quantum of the tax arrears had been agreed.
Customs will continue to investigate any business where they suspect evasion of substantial amounts of VAT has occurred, whether by the under recording or declaration of the business income, or false claims for input tax repayments. In some cases, a parallel investigation into direct tax matters will take place where it is suspected evasion of other taxes has occurred, for example, PAYE or Corporation Tax.
The involvement of a professional adviser with experience in dealing with tax investigations is essential when the occasion arises, and our Team has the depth of experience and expertise to act on behalf of taxpayers by attending meetings with HMRC, preparing a disclosure report and negotiating a settlement of the tax arrears.
If you would like to discuss how we can assist you in a Customs investigation, please contact :
Allan Brown
Martin O’Neill