Criminal prosecutions for tax evasion are on the increase. In 2010 HMRC conducted just 499 unannounced visits, by 2016 this figure had increased over 200% to 1,563. Combined with an increased political incentive and with additional funding to match, we can expect to see these numbers continue their steep upward trend.
It may be easy to assume you will never be on the receiving end of an unannounced visit. However with an ever-expanding source of data now feeding the HMRC Connect system, a database that now generates in excess of 90% of enquires, and with the introduction in September of data from overseas institutions under the ‘Common Reporting Standard’, it may something as trivial a data discrepancy that leads to a 5am knock on your door.
HMRC have a specific Criminal Investigation unit which will take on any cases where there is suspicion of fraud and there is a whole raft of legislation under which they can derive powers of search and entry.
Surprisingly the occupier of the premises that is searched need not be under investigation themselves, there are several cases where an accountant’s office has been subject to raid as HMRC believed:
- An indictable offence had been committed; and
- there is material on the specified premises that is likely to be of substantial value to the investigation of the offence and admissible at the trial for the offence.
Given these wide-ranging powers, it is essential you understand your rights and the actions you should take in the event of an unannounced visit or raid under warrant. We have prepared a checklist for these events, which can be download by clicking the icon below:
From September data from major banking centres such as Switzerland, Dubai, Hong Kong and Singapore came on stream and feeding into Connect. This data could potentially reveal evidence of suspected tax fraud.
Individuals and businesses need to ensure they are prepared and have systems in place to deal with unannounced inspections. We can assist clients with tax declarations including overseas property acquisition and rental income. This is often overlooked if there is little or no profit after any mortgage payment is made, however this income is typical of entries that will be passed to HMRC via the Common Reporting Standard and Connect, and income that as a UK tax resident should declare and report in the UK.
Contact us today. We have Chartered Accountants in London, Chartered Accountants in Essex and Chartered Accountants in Manchester waiting to take your call.