Civil Investigation of Fraud explained  

It can be a shock to receive notification that you are under investigation by HMRC.

Her Majesty's Revenue and Customs (HMRC) opens hundreds of tax investigations each year. They cover a wide range of issues, including:

• Criminal prosecutions for tax fraud
• Civil investigation of fraud
• Corporate tax investigations
• VAT fraud
• Income tax investigation
• IR35 enquiries

Civil Investigation of Fraud comes into effect when HMRC uncovers evidence of serious non-payment of tax, which they feel may be caused by tax fraud or tax evasion. The amount of underpaid tax in question is always more than £75,000, and a civil investigation will be undertaken when HMRC feels that a criminal prosecution is not necessary. If you deliberately deceive a civil investigation, however, you may face a criminal prosecution in the future.

What you must do

HMRC Code of Practice 9 (2005) sets out the procedures and requirements you face under a Civil Investigation of Fraud. You can choose to comply with these requirements or not, but the investigation will go ahead in any case. In order to reduce the potential penalties you face and to make the process as stress-free as possible, you should do the following:

• Appoint an adviser - a specialist Civil Investigation of Fraud adviser will have experience with cases like yours and will be able to prepare the documentation you need and liaise with HMRC Inspectors.
• Make a full disclosure - you will attend a meeting with your adviser and HMRC Inspectors. You will be asked a series of formal questions as well as being invited to make a full disclosure about your current tax position. You must be honest about any irregularities in your tax accounts for your whole taxation lifetime in order to satisfy the Inspectors.
• Make payments - if you are able to do so, make as many payments as you can on your account. This will not only show that you are able and willing to pay reparation for your unpaid tax, but may reduce the overall penalties given to you at the end of the process. You can make payments at any time, including during your meeting with HMRC Inspectors
• Keep documents - it is vital that you keep all documents, whether on paper or on computer file, that relate to your tax affairs. This includes anything to do with your and your family's personal and business tax. You will be asked to declare that you have provided full information to HMRC

By far the best way to deal with a Civil Investigation of Fraud is to face up to the investigation and be honest about your current and previous tax affairs. A good Civil Investigation of Fraud adviser can help you to prepare a disclosure report and to minimise any financial penalties as far as possible.

If you have received notice from HMRC of a tax investigation or Civil Investigation of Fraud proceedings, call us for help and advice today. All enquiries are strictly confidential, so phone 0800 734 3333 or e-mail scott.gilbert@gilberttax.co.uk now

Information about the different types of tax investigation cases we deal with on a regular basis.

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