TAX INVESTIGATION SERVICES

tax investigation services

Our Tax investigation Services team is headed by Dave Williams, an ex HMRC Inspector of Taxes. Dave is supported by a team of consultants with extensive experience across all fields of tax investigations.

With HMRC’s policy on tackling non-compliance issues and tax evasion getting ever more aggressive, the chances of being involved in a tax investigation are increasing. The attitude of HMRC Inspectors is also becoming more aggressive as they seek deliberate penalties in order to increase the yield of an enquiry by enabling them to charge higher penalties and increase the scope of an enquiry beyond 6 years.

From liaising with HMRC in respect of small local compliance enquiries and dealing with HMRC’s various campaigns, initiatives and taskforces to preparing Code of Practice 8 and 9 disclosure reports and Contractual Disclosure Facility (CDF) submissions, Dave and his team at FCTC have the expertise to assist you, or if you’d prefer, deal with the enquiry directly for you.

Many of the team are ex-HMRC Inspectors so have an excellent working knowledge of HMRC practices and what an officer conducting an investigation can and can’t do.

We also have experience of negotiating with HMRC using the Alternative Dispute Resolution (ADR) Service as well as preparing cases to be heard at the First Tier Tax Tribunal.

Please view our recent newsletter on HMRC Investigations which cover many of the areas we see on a day to day basis.

tax-investigation-service

The main areas of enquiries that our team deal with are as follows :-

Code of Practice 8 and 9 Enquiries

These investigations will be initiated by a team working for HMRC’s Fraud Investigation Service (FIS).  Any letter received by them has to be treated extremely seriously and advice should be sought immediately if you are at all unsure how to respond to one of these letters.  Our team has extensive experience of dealing with both COP8 and COP09 enquiries, preparing the necessary disclosure reports as well as successfully defending taxpayers who have been incorrectly accused of being involved in deliberate or fraudulent conduct on their tax affairs.

  • Code of Practice 8 (COP8) – suspected deliberate or fraudulent conduct.

HMRC will issue a COP8 letter advising they are looking into suspected deliberate or fraudulent behaviour on the part of a taxpayer.   HMRC reserve the right to prosecute in the most severe cases or where a taxpayer does not cooperate with HMRC’s investigation, however these occurrences are very rare.  We can assist with making an initial disclosure to HMRC to ensure the chances of further action by HMRC are minimal and can also defend an allegation of fraud where a taxpayer is innocent or the errors HMRC suspect were not as a result of deliberate or fraudulent behaviour.

COP8 enquiries will usually involve offshore transactions, tax avoidance schemes or larger transactions, as opposed to  suspected deliberate inaccuracies in business records or undisclosed capital gains where a Code of Practice 9 (COP9) notice would be issued instead.

  • Code of Practice 9 (COP9) – Contractual Disclosure Facility (CDF)

HMRC will issue a COP9 notice advising they are looking into suspected deliberate or fraudulent behaviour on the part of a taxpayer, but will offer the taxpayer the opportunity to make an outline disclosure, using the CDF forms and provide an immunity to prosecution if a taxpayer provides details of what they have done wrong.  A taxpayer also has the option to respond to refute the allegation, however much care is needed in considering this option and providing information to HMRC which may be relevant to the enquiry but would not suggest that there had been any deliberate or fraudulent conduct.

There is a strict 60 day time limit to respond to HMRC when issued with the opportunity to enter into a CDF, a failure to respond to either accept or refuse the CDF will result in the case being passed to HMRC’s Criminal Investigations team for them to consider whether to prosecute or pass back for further enquiries to take place.

Criminal Investigations

• Although relatively rare, most accountants will never see a client under a Criminal Investigation in their entire career, it is important to act fast and correctly if a letter is received from HMRC’s Criminal Investigations unit. Appropriate legal advice should be sought to ensure you do not do anything that is prejudicial to your client. HMRC give little time to respond to a notice of a client being under such an investigation and therefore immediate assistance should be sought.

At FCTC, we work closely with a national firm of lawyers who work with us to determine whether HMRC have a case for a prosecution. We have an excellent record of making representations to HMRC in order for cases not to proceed to Court and settlements reached either under a Civil agreement or information being put forward to demonstrate that a taxpayer has in fact done no wrong. We can also discuss the initial steps that should be taken to ensure a client responds in the correct way and avoid the possibility of an arrest warrant being issued for non-compliance of the notice.

Worldwide Disclosure Facility

The Worldwide Disclosure Facility (WDF) is open until 30 September 2018 for anyone who still needs to make a disclosure of their overseas income and who has not done so under previous offshore disclosure facilities.   After this date, the facility will be closed as legislation is brought in to legally require taxpayers to bring their affairs up to date or face prosecution under the Requirement to Correct.  This is seen as the final opportunity to make a disclosure before a harsher regime takes it place.

Penalty rates for making a disclosure are lower than would be charged if HMRC enquiries into any omissions, however they are not as generous as previous disclosure opportunities.

Please contact Chris Watts or Scott Campbell if you wish to discuss the WDF further.

UK Voluntary disclosures

There are currently several voluntary disclosure facilities in operation by HMRC to encourage taxpayers who have been non-compliant with their tax affairs to come forward and make a disclosure of these.  If a full disclosure is made HMRC offer lower rates of penalties, in some cases no penalty at all, to taxpayers who volunteer this information rather than wait for HMRC to enquires into their affairs separately.

We can assist with making these disclosures and liaising with HMRC to ensure the best possible outcome.  The following disclosure facilities are currently running :-

  • Let Property Campaign
    The Let Property Campaign gives the opportunity to bring a person’s tax affairs up to date if you’re an individual landlord letting out residential property in the UK or abroad and to get the best possible terms to pay the tax you owe.
  • Second Income Campaign
    The Second Income Campaign provides an opportunity to bring a person’s affairs up to date if they have a secondary income source  e.g. music tuition, private study tuition etc., which has not been previously declared outside of their normal source of income.
  • Credit Card Campaign (also known as the Card Transaction Programme)
    The Credit Card Campaign gives you an opportunity to bring the tax affairs of a business up to date where the business accepts credit card, debit card and cash payments which may not have been fully recorded in the business records.

If the disclosure required does not fall within the above categories, there is still a general disclosure facility available whereby any previous errors or omissions can be disclosed to HMRC.  For further information on making a disclosure please contact Chris Watts.

Domicile and residency
HMRC enquiries into issues of a person’s residence or domicile are often very complicated and technical and revolve around often confusing and detailed case law.  Karen Bowen has extensive experience of handling HMRC queries into such matters from her time working with us and previously as head of Ernst & Young’s non-residence department in one of their regional offices.
Employer Compliance

Employer Compliance visits and enquiries are one of the more common types of HMRC intervention an accountant will come across on behalf of his clients.  These can often result in lucrative settlements for HMRC as often Employers will have made mistakes over many years where HMRC can raise assessments to recover both tax and national insurance liabilities.

Julia Clutterbuck is an ex-HMRC Employer Compliance officer who can provide assistance to dealing with Employer Compliance visits, follow up enquiries and negotiating settlements with HMRC.  She can also review your existing clients PAYE schemes and benefits and expenses procedures to ensure that all liabilities are being correctly recorded on a P11d and advise where further checks and safeguards can be put in place to protect your client.

IR35 & Status Enquiries

Employment status and IR35 enquiries are often triggered as part of, or as a result of, an employer compliance check. An individual’s employment status is not set out in statue and is determined on a body of case law. This often leads to disagreement between HMRC and the taxpayers interpretation of their employment status or IR35 status.

With the recent introduction of specific public sector IR35 rules, IR35 has never been more in the spotlight.

Furthermore, the tone of HMRC enquiries into employment status and IR35 has never been firmer. For example, anyone using HMRC’s online Employment Status Service tool will no doubt be aware of the various warnings around deliberate non-compliance and contrived arrangements. HMRC usually reserves this type of terminology for taxpayers engaged in Fraudulent activity, never before seen this terminology referring to an employment status or IR35 status decision making.

The possibility of HMRC taking the view that taxpayers could fraudulently arrive at an employment or IR35 status decision only increases the need to engage with employment status specialist to advice and protect your client from any potential challenge from HMRC.

Richard Clutterbuck and Scott Campbell have extensive experience in this area, and should you need assistance please contact one of them.

VAT

We have a team of 3 ex-HMRC Inspectors who have all worked within the VAT department of HMRC.  They have extensive experience of recent HMRC working practices and will often correct HMRC officers where they work outside the parameters of an enquiry or fail to follow the correct procedures when conducting their investigations.

Our team also has experience of representing taxpayers at ADR and First Tier Tribunal level where an enquiry becomes more advanced.

If you have a VAT enquiry to which you require assistance or wish to discuss then please contact Richard Staunton or email the team at FCTCVAT@francisclark.co.uk, or for more information on other services our VAT team can offer then please go to the VAT page of our website.

Should you have any questions or concerns regarding tax investigations or if you wish to discuss making use of any of HMRC’s initiatives then please contact Dave Williams or Chris Watts.

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