HMRC Criminal Investigations


HMRC Investigations – Civil Or Criminal?HMRC Criminal Investigations is responsible for investigating serious tax fraud and other financial crimes.

Receiving an HMRC criminal investigation letter is a serious matter, indicating that you are under suspicion of committing tax fraud. Such allegations can have significant legal and financial implications.

If you believe that you have been wrongly accused, it is essential to take immediate action. Arguing your innocence requires a formal legal process, and you will need to defend your position in court.

It is highly recommended to seek legal advice and representation to navigate the complexities of the investigation and ensure your rights are protected.

We highly recommend reaching out to us promptly to understand your legal rights and choices. For a private conversation with one of our experts, call: 01246 912052 or fill out our Online Enquiry form.

Are Investigations by HMRC Civil Or Criminal?

When HMRC believes there’s potential tax fraud, it can initiate either a civil or a criminal probe. Typically, a civil investigation is the standard route. However, HMRC will opt for a criminal investigation if –

  1. It aims to set a powerful cautionary example.
  2. It feels the suspected behavior deserves criminal penalties.

HMRC Criminal Investigations

The frequency of HMRC Criminal Investigations has been increasing. This uptick is primarily due to the government’s objective to triple the investigations into severe tax offenses by 2020.

By ‘severe’, it refers to alleged frauds amounting to £50,000 or more. To facilitate this aim, HMRC has been endowed with distinct Criminal Investigation authorities.

These encompass –

  1. Seeking Court Orders for the production of necessary information.
  2. Requesting and implementing search warrants.
  3. Inspecting suspects and their properties.
  4. Retrieving assets related to criminal activities.
  5. Conducting arrests. However, the authority to decide on prosecutions doesn’t rest with HMRC – their role is solely investigative. The ultimate decision is in the hands of the Crown Prosecution Service (CPS).

If you’re apprehensive about a potential HMRC criminal charge, we are here to guide you. For a discreet conversation with one of our specialists, please fill out our Contact Us Form. We’ll get back to you at a convenient time, or you can directly reach us at 01246 912052

What Happens If You Are Suspected Of Serious Tax Fraud?

Upon receiving an HMRC criminal investigation letter, it’s crucial to seek legal advice without delay. You have a limited window of 60 days to determine your next steps.

This decision is significant and shouldn’t be made hastily. Consult with our legal team to evaluate whether accepting or declining HMRC’s proposal is in your best interest. Should you choose to decline the offer, we’re here to guide and back you during the impending investigation and legal proceedings.

We understand the anxiety and stress you’re experiencing. To provide clarity on your predicament, we’ve compiled a list of commonly asked questions available for download

What Happens If I Am Criminally Investigated By HMRC for tax fraud

If you are criminally investigated by HMRC for tax fraud, it signifies that HMRC believes there is evidence of deliberate wrongdoing on your part concerning tax matters.

Such an investigation is initiated when HMRC suspects serious tax evasion or fraud that may warrant criminal prosecution. During the investigation, HMRC will thoroughly scrutinize your financial records, transactions, and other relevant documents to gather evidence.

You may be interviewed, and in some cases, your premises might be searched. It’s essential to cooperate fully with the investigation, but it’s equally crucial to seek legal representation to ensure your rights are protected.

If HMRC finds substantial evidence, the case may be referred to the Crown Prosecution Service (CPS) for potential prosecution. A conviction can lead to severe penalties, including imprisonment, hefty fines, and a criminal record.

What Powers Does HMRC Have To Investigate Tax Fraud?

HMRC is the UK’s principal body responsible for collecting taxes and has extensive powers to investigate suspected tax fraud. These powers are granted under various legislative acts, allowing HMRC to ensure that individuals and businesses comply with tax laws and regulations.

When HMRC suspects tax evasion or fraud, it can initiate either a civil or a criminal investigation, depending on the severity and nature of the alleged wrongdoing.

While civil investigations are more common and seek to recover unpaid taxes with penalties, criminal investigations are pursued in more serious cases where prosecution might be deemed necessary.

Examples of HMRC’s powers include:

  • Issuing Information Notices: Under the Finance Act 2008, HMRC can require individuals or businesses to provide information or documents that are reasonably required for tax purposes.
  • Conducting Inspections: The Finance Act 2008 also allows HMRC to enter business premises to inspect business assets and documents. However, this doesn’t permit them to search the premises.
  • Search and Seizure: Under the Police and Criminal Evidence Act 1984 (PACE), HMRC has the power to search premises and seize evidence if they have a search warrant.
  • Arrests: HMRC officers can arrest individuals suspected of tax fraud under the provisions of PACE.
  • Freezing Assets: Under the Proceeds of Crime Act 2002, HMRC can freeze assets if they believe the assets are the result of criminal activity.
  • Recovering Debt: The Finance Act 2008 grants HMRC the power to recover tax directly from debtors’ bank accounts if certain conditions are met.

It’s essential to be aware of these powers and to seek legal advice if you find yourself under investigation by HMRC

Could I Go To Prison For Tax Offences?

Individuals can face imprisonment for tax offences in the UK. Tax evasion, which involves the deliberate act of not paying taxes owed, is considered a serious crime. For instance, if someone is found guilty of evading large sums of VAT or PAYE, they could be prosecuted and, if convicted, sentenced to prison.

The sentencing guidelines for tax evasion vary based on the severity of the offence and the amount of tax evaded. For minor offences, penalties might include fines or community service.

However, for more severe cases, especially where large amounts of money are involved or there’s a pattern of persistent fraudulent activity, individuals can receive prison sentences of up to 7 years or even more. It’s crucial to be aware of these potential consequences and to ensure compliance with tax regulations to avoid such outcomes.

What Is HMRC’s Criminal Investigation Policy?

HMRC’s Criminal Investigation Policy is designed to ensure the utmost adherence to laws related to both direct and indirect taxes. However, HMRC doesn’t hold the authority for criminal prosecutions. In England and Wales, the decision to prosecute lies with the Director of Public Prosecutions at the Crown Prosecution Service (CPS).

Typically, HMRC prefers to address fraud through its civil fraud investigation methods, known as HMRC Code of Practice 9 (COP 9). The more severe powers of criminal investigation are reserved for the gravest cases, either to set a robust deterrent example or when the alleged misconduct is so egregious that only criminal penalties would suffice.

There’s a noticeable rise in criminal prosecutions related to tax fraud. In the fiscal year concluding in April 2018, HMRC collected a staggering £608.5 billion in tax. This amount is unprecedented, and HMRC had a success rate of 90% in the prosecutions it pursued. This led to the recovery of £37 billion that might have otherwise been lost. Additionally, proactive measures prevented a potential loss of £6.2 billion due to non-compliance.

Why Is HMRC Using The Criminal Prosecution Route More Often?

With the increasing complexity of tax regulations and HMRC’s intensified efforts, more individuals are facing the prospect of criminal investigations.

Over the past few years, HMRC has been allocated a larger budget and enhanced authority to track down unpaid taxes and take action against those evading payment. This aggressive stance is generally well-received by the public and garners positive attention for policymakers, suggesting its continuation in the foreseeable future.

Estimates indicate a disparity ranging from £35 billion to £70 billion between the amount the Treasury is owed and what it successfully collects. This gap further propels HMRC to lean towards criminal proceedings to settle tax disagreements.

In line with this, HMRC, besides receiving increased funding, has been assigned specific prosecution quotas annually. This inevitably exerts pressure to meet these objectives, leading to concerns that HMRC might opt for prosecutions in situations where a civil approach would have been more appropriate in the past

When Will HMRC Will Carry Out A Criminal Rather Than Civil Investigation?

The Criminal Investigation Policy of HMRC outlines various scenarios where it would typically lean towards a criminal investigation over a civil one. These scenarios encompass –

  • Instances related to money laundering activities.
  • Situations where organized crime groups exploit the tax system.
  • When an individual in a trusted or authoritative position is involved.
  • In cases where there’s suspicion of deceit, collusion, or corrupt practices.
  • The employment of counterfeit or tampered documents.
  • Breaches related to importation or exportation regulations.
  • When the offender has a history of prior violations.
  • Cases that involve theft, unauthorised use, or intentional destruction of HMRC’s documents.


Criminal investigations carried out by HMRC play a pivotal role in upholding the integrity of the UK’s tax system. These investigations, reserved for the most severe cases of tax evasion and fraud, underscore the government’s commitment to ensuring fairness and compliance.

While most tax discrepancies are addressed through civil procedures, the existence of criminal investigations serves as a deterrent, signaling the gravity with which tax offenses are viewed.

Individuals and businesses are thus reminded of the importance of adhering to tax regulations, knowing that deliberate misconduct can lead to significant legal repercussions.

David Hanman Consultant Solicitor

David is a Solicitor and Chartered Tax Advisor. David has many years experience of advising clients on Regulatory Fraud matters, involving the smallest to the very biggest cases.

He regularly lectures to the City of London Police on these and related issues. He regularly advises on Confiscation and other consequences that flow from money laundering offences