Investigations under Code of Practice 9 (2005) are commenced where HM Revenue & Customs have reason to believe that there have been significant losses of tax due to serious tax fraud. With such an investigation, the taxpayer is under threat of criminal prosecution. A full and complete disclosure of all irregularities in the taxpayer's whole tax history will be required in order to avoid prosecution.

This disclosure will come in the form of an extensive report, which, under Institute of Chartered Accountants in England and Wales’ guidelines, should be prepared by an expert. The report will contain extensive information in relation to the taxpayer's affairs for a period of up to 20 years. Once submitted, the report will be examined in detail by the Inspector.

Where information contained in the report is inconsistent with that held by the Inspector, suggesting a failure in full disclosure, the risk of prosecution for the taxpayer is extremely high.

Suspected serious fraud cases may be triggered in a number of ways, more commonly:

large omissions from tax returns;
unusual transactions involving connected persons;
significant connections between taxpayer and a tax haven;
manipulation of group accounts through, for example, management charges;
large or unusual provisions;
PAYE operational concerns;
falsifying documents.

Should you have any further queries regarding Civil Investigations of Fraud, please contact us on solutions@morrispalmer.co.uk or call 01403 750 444.