Will I go to Prison??
This is the most regular question clients ask me when they call me in a very stressed state for help following a tax compliance check or enquiry!
So what the chance?
HMRC is responsible for investigating crime involving all of the taxes and other regimes it deals with. Based on the outcome of HMRC’s investigations a decision on whether to bring a criminal prosecution is made by the UK’s independent prosecuting authorities. In England and Wales this is the Crown Prosecution Service
HMRC website will indicate the types of cases it considers for a criminal process but the vast majority are investigated in-house by their own inspectors or under a more serious regime known as Code of Practice 9. These are Civil Investigation processes closed by a monetary settlement and no-one other than HMRC,you and your advisers will know anything about it! (But see Naming and Shaming for some serious offenders)
From their website extracts below you can whether you fall into the scenario to be considered for a criminal intervention or not ( but many will not end up as criminal) see as follows:-
It’s HMRC’s policy to deal with fraud by use of the cost effective civil fraud investigation procedures under Code of Practice 9 wherever appropriate. Criminal Investigation will be reserved for cases where HMRC needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
HMRC reserves complete discretion to conduct a criminal investigation in any case and to carry out these investigations across a range of offences and in all the areas for which the Commissioners of HMRC have responsibility.
Examples of the kind of circumstances in which HMRC will generally consider starting a criminal, rather than civil investigation are:
- in cases of organised criminal gangs attacking the tax system or systematic frauds where losses represent a serious threat to the tax base, including conspiracy
- where an individual holds a position of trust or responsibility
- where materially false statements are made or materially false documents are provided in the course of a civil investigation
- where, pursuing an avoidance scheme, reliance is placed on a false or altered document or such reliance or material facts are misrepresented to enhance the credibility of a scheme
- where deliberate concealment, deception, conspiracy or corruption is suspected
- in cases involving the use of false or forged documents
- in cases involving importation or exportation breaching prohibitions and restrictions
- in cases involving money laundering with particular focus on advisors, accountants, solicitors and others acting in a ‘professional’ capacity who provide the means to put tainted money out of reach of law enforcement
- where the perpetrator has committed previous offences or there is a repeated course of unlawful conduct or previous civil action
- in cases involving theft, or the misuse or unlawful destruction of HMRC documents
- where there is evidence of assault on, threats to, or the impersonation of HMRCofficials
- where there is a link to suspected wider criminality, whether domestic or international, involving offences not under the administration of HMRC
When considering whether a case should be investigated using the civil fraud investigation procedures under Code of Practice 9 or is the subject of a criminal investigation, one factor will be whether the taxpayer(s) has made a complete and unprompted disclosure of the offences committed.
There are certain fiscal offences where HMRC will not usually adopt the civil fraud investigation procedures under Code of Practice 9. Examples of these are:
- VAT ‘Bogus’ registration repayment fraud
- organised Tax Credit fraud