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Tax Fraud Solicitors

Being accused of tax fraud is a serious matter.

Having experienced tax fraud solicitors on your side from the start, can make a real difference to the outcome of your case.

Complex issues

Tax fraud investigations involve a large amount of evidence and can last many months, sometimes longer. Having a legal professional on your side from the start, is the only way to effectively plan and prepare for what may lie ahead.

Understand the situation

Tax evasion is a serious offence. The penalty for tax evasion can be up to 200% of the tax due. Anyone convicted of tax evasion could be given a prison sentence of a maximum of 7 years and receive a large fine.

What is tax fraud?

Tax fraud, also referred to as tax evasion, occurs when someone deliberately understates their income on their tax return for their financial benefit. For tax fraud to occur, they must do so knowingly and purposely.

In the UK, tax fraud is considered to be a very serious offence. As such, penalties for tax fraud can be severe.

If you are convicted of tax fraud, you could be imprisoned for a maximum of 7 years and face a large fine and various other financial penalties. You could also have to repay what you owe.

What are examples of tax fraud?

Examples of tax fraud include using an offshore bank account to, for example, hide money offshore so that HMRC cannot find it, not declaring all of your business’ profits to HMRC and dealing solely in cash in order to evade paying tax.

Tax fraud could also occur if someone was to knowingly over-exaggerate their expenses for their benefit.

What is an HMRC tax fraud investigation?

If HMRC suspect tax fraud, they can open either a civil or criminal tax fraud investigation. HMRC has complete discretion as to whether to pursue a civil or a criminal tax fraud investigation in any given circumstances.

It is also worth noting here that even if HMRC initially commences a civil tax fraud investigation, it may later decide that a criminal investigation should be opened.

How does an HMRC tax fraud investigation work?

Civil tax fraud investigations are implemented under Code of Practice 9.

The subject of the investigation will have the opportunity to fully disclose all of their conduct which has led to the irregularities in their tax affairs. HMRC does not usually inform this person of their specific suspicions. Instead, they will provide them with the opportunity to disclose all conduct.

The disclosure occurs through a Contractual Disclosure Facility. This is a contractual agreement between the subject of the investigation and HMRC. The person has 60 days to respond to any offer made by HMRC in this agreement.

The CDF’s terms are fixed, so there is no possibility for negotiation.

You are acknowledging that tax has been lost due to your conduct if you agree to the terms detailed in the CDF. Following this, HMRC will work to recover any tax, together with interest and penalties, which arise from your tax fraud. This could go as far back as 20 years.

Cooperating with HMRC’s tax fraud investigation could result in any penalty being reduced and the avoidance of other civil sanctions, such as insolvency.

During the civil tax fraud investigation, HMRC could decide to begin a criminal tax fraud investigation if, for example:

  • you do not respond in the 60-day timeframe
  • you refuse to co-operate with the civil tax fraud investigation

It is highly recommended that you seek specialist legal advice from experienced tax fraud solicitors, in order to ensure that you are fully complying with the HMRC tax fraud investigation.

What is the sentence for tax fraud?

Tax evasion is a serious offence. The penalty for tax evasion can be up to 200% of the tax due.

Anyone convicted of tax evasion could be given a prison sentence of a maximum of 7 years and receive a large fine.

Conspiracy to defraud, where two or more people are planning to commit fraud, carries a maximum prison sentence of 10 years.

How does a court decide on the sentence for tax fraud?

When determining a sentence in a tax fraud case, the court will take into account how much the person defrauded HMRC and how culpable they are.

The Sentencing Council’s guidelines to judges says that: the level of culpability is determined by weighing up all the factors of the case to determine the offender’s role and the extent to which the offending was planned and the sophistication with which it was carried out.

An offender could be said to have high culpability if, for example:

  • they had a leading role (where the offence was part of a group activity)
  • they abused their position of trust
  • the offence required significant planning

An offender could be said to have medium culpability if, for example:

  • they had a significant role (where the offence was part of a group activity)

An offender could be said to have lesser culpability if, for example:

  • they were not motivated by personal gain
  • they only had a peripheral role in organised fraud

What are the mitigating factors which could reduce the sentence for tax fraud?

Mitigating factors are aspects of a case which may reduce the sentence. For tax fraud, these could include:

  • the offender is mentally ill or disabled
  • the offender shows a considerable level of remorse
  • the offender was of previous good character
  • Sentences can also be reduced by pleading guilty.

What is the difference between tax fraud/tax evasion and tax avoidance?

Put simply, the main difference between tax fraud/tax evasion and tax avoidance is that tax fraud/tax evasion is illegal and tax avoidance is not.

In reality, there are many grey areas and it is important to seek legal advice from a solicitor experienced in tax fraud if you are in any doubt about what you and your company are doing.

Why do I need an experienced tax fraud solicitor?

Tax fraud is an extremely complex area of law. Only specialist tax fraud solicitors have the necessary knowledge and expertise to navigate a tax fraud investigation and build a robust defence.

Tax fraud investigations involve a large amount of evidence and can last many months, sometimes longer. Having a legal professional on your side from the start, is the only way to effectively plan and prepare for what may lie ahead.

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