UK: The criminal process with legal disputes with HMRC for tax fraud09 October 2019
HMRC is a UK government agency responsible for collecting taxes, providing certain forms of benefits and state support and managing other regulatory regimes, such as national minimum wage. It has police powers in matters of white collar crime, especially in the case of tax offences.
The legal instruments most used by HMRC in respect of white collar crime are the Police and Criminal Evidence Act 1984 (PACE) and the Organized Crime and the Serious Organized Crime and Police Act 2005 (SOCPA). These laws are generally applicable to all UK taxpayers and residents and, in certain circumstances, to foreign nationals or residents who may hold information relevant to an HMRC investigation.
HMRC’s power to obtain and seize documents or information rests on its statutory powers, based both in civil and criminal law.
Given the extent of HMRC’s powers in this respect, and the increase in the number of investigations that the agency has launched recently, all companies should ensure that they are aware of HMRC’s powers and have policies and procedures in place in case HMRC comes knocking on their door.
This practice note focuses on the whole criminal process in tax fraud matters.
After receiving HMRC’s notice of investigation or in anticipation of the start of an investigation, companies must ensure that all relevant documents (including electronic and audio documents) are preserved and that their storage location is registered to facilitate the work of the investigation services and avoid any loss. Failure to do so may lead to adverse findings, or allegations of deliberate attempts to conceal evidence.
All confidential documents provided as part of the investigation must be clearly marked “Privileged and Confidential”.
It is advisable to conduct your own internal investigation on the allegations concurrently with the one conducted by HMRC. This means that in addition to investigative work, companies will need to identify areas of concern at an early stage so that an appropriate strategy can be developed to address these concerns.
An arrest is a restraint on the liberty of the person under due process of law. There are two requirements for an arrest to be valid:
- There must be a power of arrest.
- The arrest must be carried out in a lawful manner.
If either of these requirements are not fulfilled, the arrest may be invalid and the detention of any person unlawful under Article 5 of the European Convention on Human Rights.
- Who is about to commit an offence.
- Who is in the act of committing an offence.
- If the HMRC officer has reasonable grounds for suspecting they are about to commit an offence.
- If the officer has reasonable grounds for suspecting they are committing an offence.
For more information, please contact:
John Kenneally, Partner
ebl miller rosenfalck, London
t: +44 (20) 7553 6001
The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.