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Tax Investigations
No-one enjoys undergoing an HM Revenue & Customs (HMRC) investigation. But having an experienced adviser on your side can make a huge difference. We particularly specialize in enquiries where serious tax fraud is alleged – so-called “Code 9” enquiries – dealt with by the HMRC Special Civil Investigations Office (SCI) Civil Investigation of Fraud (CIF) teams.
Code 9 enquiries
“Code 9” enquiries (so called from the HMRC Code of Practice under which they are conducted) are cases where HMRC suspect serious tax fraud – normally, cases where HMRC suspect that the tax understated is at least £100,000 and that the case warrants the involvement of their specialist national tax investigation unit rather than being dealt with at the local district level. Sometimes a Code 9 challenge will come out of the blue, direct from SCI, as a result of some information held by HMRC. In other cases a district will have concerns that a routine enquiry started locally has started to uncover evidence of serious fraud which is beyond the remit of the district. But regardless of the way in which a case reaches SCI a case which reaches them will be dealt with in much the same way. First there will be a “challenge meeting” at which formal questions will be asked. These meetings are no longer tape-recorded under the Police and Criminal Evidence Act as they used to be but they remain extremely important. If irregularities are admitted (as will always be the case – SCI will never become involved in a case on a speculative or random basis) HMRC will invite you to commission a detailed report disclosing the full extent of irregularities, to be submitted under an agreed timescale – usually around six months. It’s at that point that the experience of your chosen adviser comes into play. Our team includes consultants with experience of working on the “other side” who are well-placed to negotiate with HMRC what needs to be included; which are the “risk areas” to be reported on; what audit tests are appropriate; how many years need to be covered in detail; and so on. All of this is with a view to presenting a report which meets HMRC’s requirements and is not thrown back at you; while at the same time containing as far as possible the impact of the investigation on your life and your business.
There are advisers out there who boast of their confrontational and aggressive approach to HMRC. We don’t think that such an approach is usually in the client’s best interests. Of course, there are many cases in which widely varying conclusions can be drawn from the factual matrix of an investigation report. We are no soft touch and we will fight our corner with the best of them: but one of our strengths is the reputation and credibility we have built up over many years with HMRC. We don’t “play games” with your investigation: we aim to address with you on a frank and open basis the matters which need to be addressed, to build a relationship of mutual respect with the HMRC Case Director assigned to the investigation and to close the enquiry in the most favourable way possible for you.
Other investigation work
Most tax enquiries do not reach SCI but are settled at district level. That is not to say that they are unimportant or that they can be lightly dismissed: even a local enquiry can cause immense disruption to the business and great personal worries. It’s not helped by the fact that local investigators are less well trained than the experts at SCI and not uncommonly try to overstep their powers or simply don’t know what the law is. We will be with you every step of the way in resisting unreasonable demands and, if something has to be conceded, in negotiating the best possible deal. If we think that an enquiry has run its course and should be closed we will seek a formal notice requiring HMRC to give up. If HMRC demands are not justified we will advise on taking a case to tribunal. And above all we will help you to keep the enquiry in perspective, to get you through it and out the other side with the minimum impact on your business and your life.
Insurance
BKL clients are able to take advantage of insurance at favourable rates against the professional costs of district-level investigations and resolution of tax disputes. If you are not covered and would like to have more information about the costs and scope of the cover offered please contact us. But don’t wait until HMRC have issued an enquiry notice: for some reason underwriters seem strangely reluctant to offer theft cover after the burglar has arrived!
