Civil Investigation of Fraud (Code 9): historical record: pre-authorisation review and action: first party contact and uplifting of records
Officers must be mindful of the risk of the ‘loss’ of any vital evidence in advance of formal invitation to the taxpayer/taxpayer’s representative being made. If it appears that our case would be irreparably damaged by the absence of certain documentary evidence, 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.
It may also be useful to verify HumInt information during the review stage, and before a case is registered, by examining the business records.
From 1 April 2009, the appropriate statutory power is at paragraphs 10 and 16, Sch 36 FA 2008. It applies for the purposes of IT, CT and CGT, as well as VAT. Technical and operational instructions on the use of this power are in the Compliance Handbook, and must be followed.
Care must be taken, when examining or removing records in such a fashion, 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 demonstrate we retain an open-mind and that there may be an innocent explanation for any discrepancies.
It is for this reason that, on no account, should pre-prepared invitation letters 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. There may very well be Human Rights Act implications (particularly if the taxpayer does not have proper representation or advice to hand on the visit) or other tax regime issues that are not apparent at the time.