HMRC
Criminal Tax
Investigations
Forensic tax expertise for individuals and businesses under criminal investigation by HMRC, working alongside your criminal defence solicitors.
If HMRC officers are at your premises, or you have been arrested or invited to an interview under caution, please call us immediately on
Do not discuss the substance of the matter with HMRC until you have taken advice.
HMRC investigates most suspected tax fraud civilly. Criminal investigation is the exception, reserved for cases in which HMRC judges prosecution to be necessary, typically due to scale involved, the nature of the conduct, or the deterrent value of a public prosecution.
That exception does exist, and where it applies the consequences are of an entirely different order: conviction, custodial sentences, confiscation proceedings under the Proceeds of Crime Act, and lasting professional and reputational damage.
How to tell whether you are in a criminal investigation
The indicators are usually clear.
HMRC officers attending your home or business premises with a search warrant
Arrest
An invitation to an interview under caution under the Police and Criminal Evidence Act 1984
Restraint orders freezing assets or accounts
Third parties informing you that HMRC has approached them about you
Why HMRC opens IHT enquiries
Increasingly, the answer is data. HMRC cross references IHT accounts against Land Registry records, bank and investment data, and its wider Connect dataset. Discrepancies between the account and the information HMRC holds elsewhere generate referrals. Estates containing property, business interests, trusts, significant lifetime gifting or overseas assets are statistically more likely to be examined.
Penalties and executor liability
Penalties for inaccurate IHT accounts follow the standard behaviour-based regime. Careless errors attract penalties of up to 30% of the additional tax, and deliberate errors substantially more, with the maximum rising where the error is concealed and higher again for offshore matters. Interest runs on the unpaid tax from the due date.
Where an executor has already distributed the estate, they can be pursued personally for the shortfall. This is the situation we are most often asked to help, and it is the one in which early specialist involvement makes the greatest practical difference.
The clearest indicator of all is a caution, which begins “You do not have to say anything, but it may harm your defence”. Anything said in that interview becomes evidence.
What to do in the first hours
Say nothing substantive
You have the right to silence and the right to legal representation, and you should exercise both. Attempting to explain matters informally is a common way of damaging your own position.
Do not destroy, alter or conceal anything
Perverting the course of justice is a separate offence, and it is frequently easier for HMRC to prove than the underlying tax fraud.
Do not contact others who may be involved
It can be interpreted as collusion and can support a conspiracy charge.
Obtain representation immediately
You need a criminal defence solicitor with HMRC prosecution experience, and you need forensic tax expertise. They are distinct skills, and both are necessary.
How Bracey’s works on criminal cases
We are accountants rather than solicitors, and we are clear about that distinction. In criminal matters we act as forensic tax specialists alongside your criminal defence solicitors and counsel. That role is often decisive, because HMRC criminal cases are built on tax analysis that is frequently open to challenge.
Analysis of HMRC’s case
Prosecution figures are computations, and computations can be incorrect. Establishing the actual tax position is central to the defence.
Expert evidence
Reports and testimony on the underlying tax treatment.
Quantum
Challenging the amount alleged, which affects both the charge and the sentence, and is critical in confiscation proceedings where figures are often materially overstated.
Perspective from within HMRC
Our team includes a former HMRC tax inspector with 10+ years inside the department and 11+ years advising clients since. Understanding how HMRC builds and reviews a case is a genuine advantage in assessing where it is weak.
The civil route, where it remains open
In some cases, there is scope to move matters towards a civil settlement under Code of Practice 9. That window closes quickly.
Prevention: the point at which this remains avoidable
In most cases that reach a criminal investigation, there was an earlier point at which a voluntary disclosure would have resolved the matter at a fraction of the cost.
If you are aware of a problem and HMRC has not yet contacted you, you have options that will not be available in six months. Unprompted disclosures attract substantially lower penalties, and the Contractual Disclosure Facility can be requested voluntarily, providing protection from prosecution in respect of the conduct disclosed.
That is a conversation worth having now. It is confidential and there is no charge for it.
Frequently asked questions
Could this result in a custodial sentence?
That depends on the amounts involved, the conduct, and whether a prosecution proceeds at all. Many cases that begin as criminal investigations do not result in charges, and many that do result in charges, do not end in custody. What is certain is that early, competent representation improves the position.
Who prosecutes HMRC cases?
In England and Wales, the Crown Prosecution Service. In Scotland, the Crown Office and Procurator Fiscal Service.
Can I still make a disclosure once a criminal investigation has begun?
The protection offered by the Contractual Disclosure Facility is not available for conduct already under criminal investigation. That is precisely why the timing matters.
Do you handle the legal defence?
No. We provide the forensic tax expertise and work alongside criminal solicitors who conduct the defence. If you do not have a solicitor, we can refer you to firms that specialise in HMRC prosecutions.
Get in touch
If the matter is urgent, please call rather than email.
Or book a free 30-minute consultation online.