civil investigation of
fraud and suspected under
code of practice 9 (cop 9)

Tax fraud inspectors within the Civil Investigation of Fraud
departments are more experienced HMRC inspectors and are
likely to be extremely intrusive. The Civil Investigation of
Fraud teams deal with investigations involving up to £500,000.
Larger amounts are dealt with by Special Civil
Investigations (SCI).

It is vital you get representation from experts for your
investigation who deal with tax fraud issues all day,
everyday.

HMRC usually investigate individuals under Code of Practice 9
procedures which are only opened if there is firm evidence of
tax fraud.

HMRC inspectors spend months collecting evidence and
information on cases, before opening an investigation.

This is why investigations run by HMRC’s Civil Investigation of
Fraud department must be taken seriously.

We cannot stress how important it is you have strong,
reliable representation in an investigation.

Our experts are well versed in tactics used by HMRC and can
handle the pressure these investigations impose.

We know your rights and we are here to fight your corner.

That is why we are here. We will take the stress and strain
away from an investigation, allowing you to get on with what
you do best; running your own life.

An investigation into your income tax returns is usually
carried out under Code of Practice 11 procedures. However,
if an investigation into your self assessment return is carried
out under Code of Practice 9 then the taxman suspects you
of serious tax fraud.

Code of Practice 11 deals with investigations carried out by
Local Compliance Offices into income tax returns.

They may be full or aspect enquiries.
A full Code of Practice 11
investigation is as it sounds; an investigation into every
point in the return.
Aspect enquiries are used when only three or four
points are raised in the return.

Aspect enquiries can turn into
a full investigation at any time, so care must be taken in dealing
with an aspect enquiry in order that it doesn’t turn into a full investigation.

HMRC, on occasions, select self assessment returns at random
to run checks to see if anything is wrong which would not
be apparent at first glance. HMRC can look back into the
previous 6 years’ returns but if they suspect serious fraud they
may access the previous 20 years under Taxes Management Act
1970 S. 36. Dealing with investigations is our specialty and we always
fight tooth and nail to ensure all of our clients get a fair settlement
and fair penalties.

HMRC may decide to open an investigation into your business
and your company return if they pick up on these mistakes,
or if they suspect the mistakes are more than just accidents.

HMRC will inform you in writing that they intend to start an
investigation and will also tell you if they are looking at your
whole company return or only at specific areas. This means they will
start either a Full or Aspect enquiry.

HMRC have 12 months from the date the return was due
to have been submitted to tell you that they intend to start
an investigation. If you submit your return late, then HMRC
have 12 months from that date to enquire into your company affairs.
You need to take action and get specialised corporation
tax investigation advice the minute you receive
the letter from HMRC.

Running a business is hard enough without the added
strain of an investigation which is why we are here
to take that stress and worry away. These investigations
can lead to HMRC inspectors requesting information about
your personal returns which is why it is vital to have a Code
of Practice 14 specialist on your side.

If HMRC decide to open an investigation into your Partnership Tax
Return, they will send you a letter informing you of their decision
quoting Section 12TMA 1970

This is a formal notice of enquiry and, like an investigation
into a personal tax return, they may look at the return as
a whole or just at specific parts of the return.

This means that either a full or aspect enquiry is opened. You will
be informed in the letter as to whether they are aiming
to look only at specific aspects of the return or as a whole.

Investigations into Partnership Tax Returns are dealt
with by experienced HMRC inspectors within their Local
Compliance Offices and are, usually, opened after HMRC
have conducted initial investigations and perceived there
to be a substantial liability.

I received a Section 12A TMA 1970 notice, what should I do?
First and foremost you should contact an expert who has
experience in dealing with Local Compliance Investigations
and Partnership Tax Return investigations. A HMRC investigation
may appear to be relatively simple to begin with, but they can easily
develop into something more serious.

A notice of enquiry into a Partnership Return automatically extends to each partner’s personal return if they have submitted one. You should be ready for questions about the partnership aspects of your personal return.

Non-partnership aspects of the personal returns can only be
opened if a separate Section 9A TMA 1970 investigation is opened,
which would be issued separately. Rather than having all partners within
a partnership dealing with the investigation, the partner who
was nominated for filing the Partnership Tax Return and
Partnership statement will be the one responsible
for the investigation.

The nominated partner will also be responsible for keeping
the other partners informed of the progress of the investigation.

Juggling VAT in your business can be difficult. Sometimes things go wrong and an investigation is launched into your business affairs. In a VAT investigation, HMRC can now go back 20 years to recover VAT lost due to criminal or civil VAT fraud.

HMRC have powers to arrest, without a warrant, anyone suspected of criminal VAT fraud or using false documents (Value Added Tax Act 1994 S.72 (9)). Assurance was given that this power would only be exercised by specialist investigators and in the most serious VAT investigation cases.

Part of HMRC’s review of powers has sought views on applying the relevant provision in the Police and Criminal Evidence Act 1984 (PACE) across all of its activities. Before the merger of Inland Revenue and Customs and Excise to form HMRC, these powers and associated safeguards were only available for specific taxes and duties.

But changes introduced in the Finance Act 2007 gave trained officers harmonised powers to apply for search warrants, production order and powers of arrest across all areas of taxes. All of which are subject to important safeguards which attach to criminal investigations generally. The statutory record keeping requirements contained in the Finance Act 2008 sch.37 are supported by the information powers included under sch.36 and they apply to all taxes administered by HMRC including VAT.

There is no appeal against HMRC’s request to inspect the person’s records but the request would have to be reasonable. This is a very complicated field, especially since the Finance Act of 2008. HMRC will issue a PN 160 VAT investigation when they suspect that serious misconduct or VAT fraud has occurred. A charge of dishonesty can be given.

Professionals, such as accountants or lawyers, cannot afford the stigma of this type of investigation, especially if they belong to professional bodies where complaints can be made about whether they have acted professionally or not. Although you do not have to attend an HMRC meeting under a PN 160, HMRC expect you to fully co-operate with them.

KinsellaTax do not allow clients to meet with HMRC tax inspectors during an investigation, unless they are legally required to do so. We believe that HMRC meetings add additional stress to an already extremely worrying time.

We will always fully co-operate with HMRC on a clients’ behalf, providing that the information HMRC request is necessary and they are permitted by law to ask for it. Our experts know your rights and we will fight to make sure you are treated fairly and courteously throughout.

A VAT fraud investigation is serious and anyone undergoing this by HMRC should have strong and reliable representation from the outset. If you think HMRC suspect you of VAT fraud, or you have already received a letter from HMRC, you need to contact an expert IMMEDIATELY.

HMRC carry out PAYE audits to make sure you are sticking to the rules set out for all payroll related aspects.

These would include:

• Employment Status
• National Insurance Contributions and Deductions
• PAYE Tax
• Taxable Benefits in Kind, and
• Termination Payments

Every PAYE investigation carried out by HMRC is different. Our experts keep themselves up to date with current HMRC legislation, so we can continue to fight for your rights successfully.

Our advice to you is simple: Don’t ever undergo a visit or investigation with HMRC without having specialist representation to stick up for you. If you are under investigation by HMRC for PAYE, or think that dreaded letter will be landing on your doorstep very soon, you should get advice NOW.

if you have dealt with HMRC direct whilst they have carried out an investigation into your affairs and they have arrived at a figure for tax, interest and penalties that you disagree with then there is redress through the First Tier Tax Tribunal. HMRC, in order to put pressure on you, may issue an assessment which you might find mind boggling. You have 30 days to appeal that assessment. You’ve then got an opportunity to lodge the appeal with the First Tier Tax Tribunal. But, let’s stop there. What you should have done when you received the first letter from HMRC saying they were looking into your affairs is got a specialist on board who has experience in dealing with investigations. We have the unenviable position of being one of the leaders in the field. You would not be going to a First Tier Tax Tribunal disagreeing with HMRC over what tax is due, what interest is due and what penalties are due following an investigation. We would agree, subject to your approval of course, what is payable – after making a proper disclosure report to HMRC – and agree the penalties which can be up to 100% of the tax due. We like to think they can get it to 25% on most occasions and interest will follow the stat norm, however these matters need to be checked. If there is a disagreement with HMRC, which is highly unlikely, then you are still able – via – to make an appeal to the First Tier Tax Tribunal and it follows the usual route. This is a court of law, evidence is given, documents are provided, witnesses give their evidence and the Judge comes to a conclusion at the end of the trial. But that is something that you want to avoid because it is very costly, very time consuming and very, very tiring. However, if the matter goes to the First Tier Tax or Upper Tier Tribunals you will be represented by one of our barristers who will be very carefully briefed about the whole case.