HMRC Specialist Investigations units are only involved in the most serious and complex tax investigations worth over £500,000 in tax, interest and penalties, where serious fraud investigation is warranted or aggressive tax avoidance is suspected.
For this reason, HMRC’s Specialist Investigations is comprised of HMRC’s ‘elite’ investigators. So, if you receive a letter from specialist investigations, it is never good news.
What cases are Specialist Investigations units involved in?
Specialist Investigations is responsible for undertaking investigations across all taxes under two codes of practice:
- Code of Practice 8 – Where large amounts of tax are at stake but where serious fraud is not suspected;
- Code of Practice 9 – Where large amounts of tax are at stake and serious fraud is suspected.
Specialist Investigations units work in small teams and receive input from the inspector who carried out the initial HMRC investigation. They also work closely alongside agencies like the Crown Prosecution Service and the National Crime Agency.
Code of Practice 8 – Tax avoidance
Under Code of Practice 8 procedures, Specialist Investigations units investigate cases of suspected tax avoidance involving marketed schemes or business sectors where tax irregularities are common. These cases typically involve a complex or technical situation where the outcome may not be certain. These cases often involve an offshore element and can be passed on to the Revenue and Customs Protection Office (RCPO) for a criminal tax prosecution.
Code of Practice 9 -Tax fraud
Cases of tax fraud are investigated under Code of Practice 9 procedures. Specialist Investigations is involved in cases where prosecution is not yet decided but remains a possibility. HMRC reserves the right to start a criminal investigation where it suspects you have failed to make a full disclosure of all irregularities. However, HMRC will not pursue a criminal investigation in exchange for a full disclosure of irregularities.
Contractual Disclosure Facility
As part of the Specialist Investigations process, you will be required to submit a comprehensive disclosure report covering up to 20 years. This will need to be accompanied by a completed statement of assets and a certificate of full disclosure. In your disclosure you must also include a completed certificate of all bank, building society and credit cards operated during a specified period.
The Specialist Investigations process is not a criminal investigation. However, making a materially false or misleading statement can result in a criminal prosecution. HMRC must seek non-confrontational solutions wherever possible, but, fail to cooperate with the Specialist Investigations unit and you could face litigation in the Tax Tribunal or higher courts. That should be seen as the absolute last resort.