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HMRC internal manual

Fraud Civil Investigation Manual

Where CDF offer is made up to 29 June 2014: pre-authorisation review and action: first party contact and uplifting of records

When officers are reviewing any case they must always be mindful of the risk of the ‘loss’ of any vital evidence in advance of contacting the taxpayer/taxpayer’s representative.

If it appears that our case would be irreparably damaged by the absence of certain documentary evidence, then exceptionally it may be necessary to arrange an advance visit to the taxpayer and, if the visit maintains our concerns, to apply the appropriate statutory powers in order to secure the relevant books/records.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

From 1 April 2009, the appropriate statutory power is at paragraphs 10 and 16, Sch36 FA 2008. It applies for the purposes of all taxes except excise duties. Technical and operational instructions on the use of this power and the safeguards you must follow are in the Compliance Handbook, (see CH20000) and must be followed.

Care must be taken, when examining or removing records, not to give an impression that we have already made up our minds that an offence has been committed. Whilst we may properly say that we have concerns over the accuracy of the returns submitted, and are accordingly taking away documents to consider further, it is of paramount importance that we can demonstrate that we have used our powers because the documents/information we are requesting or the inspection being carried out is reasonably required to check a tax position. At the same time we must also show that we retain an open-mind and that there may be an innocent explanation for any discrepancies.

It is for this reason that pre-prepared invitation letters should not be issued to the taxpayer/taxpayers representative on any such visit. However, it is perfectly proper that the taxpayer should be informed that, if our examination of the records does not remove our concerns, we will write to them in due course to invite them to attend a meeting.

This applies even if, in a particular situation on an advance visit, the taxpayer demands an immediate explanation of our concerns and/or a discussion regarding the reasons behind any apparent discrepancies. Even if officers feel that, on the face of it, there would be benefit in resolving matters ‘there and then’, they should not be drawn into doing so. Officers must be mindful that there could well be other tax regime issues that are not apparent at the time. Furthermore, any discussions (particularly if the taxpayer does not have proper representation or advice to hand on the visit) must be handled correctly from an HRA perspective and officers must not say anything that could prejudice a criminal investigation.