There are three main types of tax investigation that are carried out by HMRC. These are often referred to as a Section 9A enquiry, a Code of Practice 8 (COP8) and Code of Practice 9 (COP9).

They are not criminal investigations and don’t always lead to criminal prosecution. However, HMRC can start criminal investigations and prosecution if you don’t comply or they find evidence of serious offences.

Section 9A enquiries are used by HMRC to review information entered on your self-assessment tax return. These can relate to a particular aspect of your tax return or a random review of your submission. They are usually conducted through written communication with HMRC.

COP8 investigations are used if HMRC suspects you of tax avoidance or minor fraud. They usually involve a series of informal meetings and correspondence between you and HMRC to identify any underpaid tax.

COP9 investigations are used when HMRC suspects you of serious fraud but hasn’t started a criminal investigation. You must give HMRC a detailed report about your tax affairs, as well as anything you’ve done – deliberately or not – that has caused any irregularities.

Once the investigation has settled on a value for any unpaid tax (including interest), you and HMRC negotiate a penalty payment based on your behaviour before and during the investigation. You will pay less of a penalty if you are helpful and cooperative.

Most civil tax investigations end with you and HMRC agreeing on how much tax and how much of a penalty you should pay. You don’t need to go to court if this is the case.

If you can’t reach a mutual agreement and disagree with HMRC’s decision on the case, you can make an appeal and begin litigation in either civil court or a tribunal.

If HMRC starts a criminal investigation against you and finds evidence of criminal offences, you may have to go to court to face criminal prosecution.

Whatever type of tax dispute you’re involved with, it is vital to seek legal advice and representation as early as possible. This will give you the best chance of resolving your dispute without going to court.

If you do have to go to court, our solicitors can also advise represent, and support you throughout.

Contact us online or call 0370 1500 100 to find out more about how we can help.

If you’re unhappy with the outcome of the HMRC investigation, you can request an internal review. This will be carried out by another HMRC officer who has no previous involvement with the case. They can either confirm or change the figures of the original investigation.

If you’re still unhappy, you can appeal the decision in a civil court or tribunal – this starts the litigation process.

During litigation, you and HMRC present evidence for your different tax calculations. The court or tribunal will decide on the correct tax figure.

If they find that you’ve underpaid, you’ll get a deadline to pay the difference, plus interest and a penalty payment. You may be allowed to make payments in instalments.

If you fail to make any required payments, you may face criminal prosecution.

Although HMRC handles minor tax avoidance and fraud cases with civil litigation, more serious offences risk criminal prosecution. These can include:

• Income tax evasion
• VAT evasion
• Cheating the public revenue
• Providing false documents or information to HMRC
• Smuggling or fraudulent evasion of excise duty on imported goods (e.g. cigarettes, alcohol)
• Money laundering.

There are now more criminal prosecutions for tax offences than ever before. If you’re facing tax litigation of any kind, you must get legal advice as soon as possible. Call us on 0370 1500 1000 and speak to our team confidentially today.

You must pay any unpaid tax along with interest calculated since the date the tax was due. The additional penalties will depend on what type of litigation you are going through:

Civil – You can negotiate a monetary penalty with HMRC based on the amount of unpaid tax, whether or not the missed payment was deliberate, and how cooperative you’ve been during the investigation. If you can’t negotiate a penalty, it will be decided in court or tribunal. HMRC can publicly publish information about penalties above certain thresholds.

Criminal – A criminal prosecution can result in a fine, imprisonment or both. In either case, you must still pay back the tax as well. You may also be ordered to pay the prosecution’s costs. Tax evasion is taken extremely seriously and is often punished with severe penalties.

You may also be prosecuted under the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2017. Your possessions can be confiscated if you are convicted of money laundering.

Our solicitors may be help you avoid civil or criminal penalties or negotiate less severe penalties. Contact us online or phone us on 0370 1500 100 for more information.