TAX EVASION
It’s important to know the difference between tax avoidance and tax evasion. Despite the similarity of the terms, they fall on very different sides of the legality spectrum – tax avoidance, whilst heavily criticised, is considered to be bending the rules but still legal, but tax evasion is a criminal offense.WHAT IS TAX EVASION
Tax evasion is also referred to as tax fraud, which should give some indication as to how seriously it is taken by HMRC – ignorance is no excuse. Should an individual be suspected of partaking in tax evasion they will be investigated, with prosecution the aim in some cases, regardless of whether this was their intent. This is why it is hugely important to retain a tax specialist to assist with your business dealings and ensure that you do not fall foul of any legal misunderstandings or errors.
How HMRC will Investigate Tax Evasion
Suspicion of tax evasion
If an individual or business is placed under tax investigation from HMRC, it will be due to a suspicion that something is awry with the tax returns in question. This could be related to the tax return that you have filed as an individual or business, any expenses that have been claimed as tax deductible, payments made to employees that fall below the government-mandated minimum living wage, or any VAT that has been involved in your business transactions.
Process of Tax Investigation
The process will usually begin with a formal legal letter from HMRC, announcing that your accounts have been selected for a compliance check and asking for further information – potentially also inviting you to a meeting. If inconsistencies are found, these will be discussed with the individual in question and draw a conclusion as to any penalties that may be required, which is often penalty. In the case of major businesses suspected of tax malpractice, however, HMRC may make an unannounced visit to the business premises and review financial records on-site.
Criminal investigations
HMRC has always taken a dim view of tax evasion, but now it is increasingly likely that any accusation of such as practice will result in an investigation
specialist investigation
If you should receive a letter from HMRC’s Specialist Investigations division, you should take this very seriously indeed and seek professional advice immediately.
proceeds of crime act
Proceeds of Crime Act relates to Revenue Functions. The purpose is to permit the confiscation of any financial or material gain from the committing of a crime
code of practice 8
COP8 investigations can be slightly confusing. HMRC’s fraud investigation act under this code, may not relate to criminal accusations of fraud
code of practice 9
Any investigations that are instigated under Code of Practice 9 will result in a criminal accusation and must be taken extremely seriously.