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HMRC internal manual

Fraud Civil Investigation Manual

HM Revenue & Customs
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Where CDF offer is made up to 29 June 2014: action following issue of Code of Practice 9: denial of irregularities - cooperation offered

Where a denial has been received but co-operation has been offered it will not normally be appropriate to request the business records until you have established how your investigation will proceed. If possible you should meet the taxpayer.

Where the taxpayer accepts your offer of a meeting there are various possible outcomes. For example:

  • After you have discussed the matter further and, if necessary, after you have prompted or challenged the taxpayer, they continue to deny any irregularity or to provide an adequate response to your suspicions. You should proceed to investigate the case yourself. You can take up any offer of co-operation, such as voluntary provision of records and explanations. (This will reduce any future penalty and should be encouraged.) You should not encourage the taxpayer to commission a Disclosure Report. If they do, you must make it clear that that is purely their decision.
  • The taxpayer, on prompting, does make a disclosure which substantially addresses your suspicions. You may move the case forward as you would a CDF case, seeking a full Disclosure Report if necessary, and a Formal Disclosure. The only difference will be that the formal undertakings will not be in place. Unless previously unsuspected frauds are disclosed, it will not be necessary to resubmit the case to CI.

The taxpayer is able to satisfy your concerns with an innocent explanation. You should close the case, or take action to address any non-fraudulent irregularities disclosed.

Although the taxpayer does not have the absolute assurance that HMRC has ruled out a criminal investigation in relation to the frauds that have been disclosed and are being investigated, as we are conducting a civil investigation and the matter is not being investigated with a view to prosecution, the requirements of PACE do not apply. The decision to conduct a criminal investigation can only be made by CI and you are only authorised to conduct a civil investigation. You should therefore work your investigation under COP9 with a view to a civil settlement only, unless CI decides to take over the case when your involvement will cease.

If during the course of your investigation you find evidence of further frauds then you should consider if the case should be referred to CI.

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

If the offer of a meeting is declined you should proceed on the basis that the taxpayer has no wish to make a disclosure. In such cases it is important that you check to make sure that the taxpayer has been told in writing (copy to the adviser) that as a disclosure has not been made within the terms of the offer made under COP9, HMRC are now conducting their own investigation.

You should never rule out the possibility that at some point the taxpayer might reconsider and be willing to meet with you to discuss matters and you should be willing to take the opportunity to meet.