What is the Role of the HMRC Fraud Investigations Service

In today’s world, tax fraud and aggressive tax avoidance have become increasingly complex and challenging issues.

Understanding what is the role of the HMRC Fraud Investigations Service (FIS) is essential for taxpayers, businesses, and professionals alike.

The HMRC Fraud Investigations Service is a specialized unit that works to identify and address cases of tax fraud.

FIS has the authority to analyze serious tax fraud, taking into account evidence and public interest when assessing potential cases.

Seeking professional assistance from members of the Chartered Institute of Taxation is advisable when undergoing an HMRC Fraud Investigations Service investigation in order to protect rights and ensure knowledge during the process.

In this blog post, we will explore the purpose, functions, and evolution of FIS, as well as the types of cases they handle, their collaboration with other law enforcement agencies, and the potential repercussions of their investigations.

Armed with this knowledge and extensive experience, you’ll be better equipped to navigate the complexities of tax fraud and aggressive tax avoidance.

Formation and Evolution of FIS

In 2015, FIS was established through the amalgamation of the Criminal Investigations Unit and the Special Investigations unit.

Since its formation, the FIS has expanded in terms of scope and size, now possessing a greater range of authority and capabilities to analyze serious tax fraud.

FIS always evaluates the amount of evidence and public interest when initial assessment suggests a likely tax fraud.

If criteria are met, prosecution is pursued.

HMRC often secures convictions and confiscation orders under Money Laundering Regulations, requiring full repayment of tax evasion proceeds.

Key Functions of FIS

The primary objectives of the HMRC Fraud Investigations Service are threefold: to detect and sanction high-value tax fraud and evasion, to increase adherence to the law, and to discourage non-compliance by detecting and addressing it.

To achieve these objectives, FIS specializes in investigating suspected large losses of taxes and has the authority to assume responsibility for compliance inspections initiated by other HMRC divisions.

Types of Cases Handled by FIS

FIS is responsible for dealing with serious tax fraud cases, including those involving wealthy individuals and offshore accounts.

Additionally, they are tasked with recovering proceeds of crime and targeting taxpayers suspected of serious tax evasion.

In some instances, FIS may conduct an ‘aspect’ investigation, which is an inquiry conducted by HMRC when a particular area of a company’s tax affairs appears to warrant further examination.

This demonstrates the wide range of cases FIS is equipped to handle in pursuit of tax compliance and fairness.

Civil and Criminal Investigations

There’s a distinct difference between civil and criminal investigations. Civil investigations involve disputes between individuals or organizations, whereas criminal investigations involve potential violations of the law.

In criminal cases, the prosecution must demonstrate its allegations beyond a reasonable doubt, while in civil cases, the plaintiff usually has the burden of proving their allegations by a preponderance of the evidence.

FIS is renowned for its involvement in severe civil investigations under COPD8 and COPD9.

Code of Practice 8 (COP8) applies to investigations without fraud suspicion, while Code of Practice 9 (COP9) notifies individuals of impending fraud investigations, including associated companies.

During these investigations, it is essential for taxpayers to obtain independent professional counsel.

This ensures that their rights are safeguarded and that they are informed of any potential repercussions and penalties that may be imposed due to the investigation.

Understanding the HMRC Fraud Investigations Service

Dealing with tax fraud and aggressive tax avoidance is no easy task. That’s where the HMRC Fraud Investigations Service (FIS) comes in.

FIS is a specialist unit of financial investigators dedicated to addressing these issues by examining cases of alleged significant and high-value tax fraud and tax evasion, both domestically and abroad.

As a result, FIS plays a crucial role in maintaining tax compliance and ensuring that everyone pays their fair share of taxes.

The Contractual Disclosure Facility (CDF)

The Contractual Disclosure Facility (CDF) is a non-statutory process employed by HMRC to contact individuals suspected of serious tax fraud, offering them the opportunity to fully disclose all the tax frauds they have committed.

The aim of the CDF is to motivate taxpayers to cooperate through the provision of reduced penalties where fraud.

The CDF necessitates the acceptance of tax evasion, errors and omissions, and full adherence to HMRC’s inquiries.

If a taxpayer declines the CDF, legal action may be taken, and the penalties may be more severe.

Thus, it is crucial for taxpayers to consider the potential ramifications of their decisions when facing a CDF offer.

Collaboration with Other Law Enforcement Agencies

During investigations, HMRC can share information with other law enforcement bodies.

Although the specific agencies involved are not disclosed, this collaboration allows for a more comprehensive approach to tackling tax fraud and aggressive tax avoidance.

Recognising and Responding to an FIS Investigation

Upon receiving a letter from FIS, you should expect a brown HMRC letter requesting additional information, as well as a Code of Practice leaflet outlining the reasons and scope of the investigation, which could include foreign assets and customized tax planning schemes.

It is crucial to comply with the request as honestly and efficiently as possible, providing a full and accurate disclosure of any deliberate and non-deliberate conduct that may have caused irregularities in your own income tax and other tax affairs therein.

It’s important to understand the distinction between Code of Practice 8, code of practice 9 and Code of Practice 9.

Code of Practice 9 and code of practice 8 applies to cases not suspected of tax fraud, whereas Code of Practice 9 is applicable to cases suspected of tax fraud and may provide access to the Contractual Disclosure Facility.

Potential Consequences and Penalties

In certain cases, particularly where HMRC deems it necessary to send a deterrent message, criminal proceedings may be employed.

The Legal and Compliance team possess the authority to impose fines and sanctions to compel companies to either pay the owed amount or cease trading immediately.

The benchmark for identifying individuals and business who are delinquent in their payments to HMRC is £25,000 or more.

These potential consequences emphasize the importance of businesses remaining compliant with tax laws and obligations.

Seeking Professional Assistance

Engaging professional help during an HMRC Fraud Investigations Service investigation can offer specialized knowledge and advice on managing the investigation process and possibly minimizing penalties.

It is recommended to seek assistance from a qualified professional, such as members of the Chartered Institute of Taxation.

Facing an FIS investigation can be a daunting experience, with potential repercussions and sanctions including fines, penalties, and even criminal prosecution.

By consulting a professional, you can ensure that your rights are protected and that you are well-informed throughout the investigation process.

Frequently Asked Questions

What is the HMRC FIS team?

The HMRC Fraud Investigation Service (FIS) is the premier tax enforcement team within HMRC and is responsible for tackling serious fraud and wrongdoing, as well as investigating both civil and criminal offences related to tax evasion.

FIS ensures that HMRC has a robust approach to combating these issues.

What happens when HMRC investigate you?

If you are investigated by HMRC, it is important to take the necessary steps to ensure a satisfactory outcome.

After the investigation has been concluded, HMRC will provide an official notice that outlines the results of their findings.

If errors have occurred in your filing, HMRC will provide information on how to make the corrections.

You should make sure to take this advice and act quickly within the prescribed time frame.

What is the role of a criminal investigator in the HMRC?

As a criminal investigator for HMRC, our role is to effectively gather evidence of wrongdoing in cases of suspected financial crime.

We work diligently to build compelling evidence and present it to the Crown Prosecution Service so that they can decide if a prosecution should be pursued.

In doing so, we help ensure that justice is served and deter future attempts at tax evasion or fraud.

What is the purpose of fraud investigation?

The purpose of a fraud investigation is to identify, investigate and assess potential or suspected cases of financial misconduct.

By examining evidence and statements, investigators are able to determine whether there has been fraudulent activity, how it was carried out, who was involved and the amount of money or assets that investigators say has been misappropriated.

Investigations into fraud can range from embezzlement and fraud to false financial statements and dubious insurance claims.

Summary

In conclusion, the HMRC Fraud Investigations Service plays a vital role in maintaining tax compliance and fairness, tackling serious tax fraud and aggressive tax avoidance.

From its formation in 2015 to its current operations, FIS has grown in scope and size, demonstrating its commitment to addressing these complex issues.

Understanding the role of FIS, the types of cases they handle, and the potential consequences of their investigations is crucial for taxpayers, businesses, and professionals alike.

By remaining informed and compliant with tax laws and obligations, you can navigate the complexities of tax fraud and aggressive tax avoidance with confidence and peace of mind.

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