Case identification: basic principles: fraud
Fraud can be indicated where any of the following circumstances are suspected to be present:
- false accounts have been deliberately compiled
- documents affecting the accounts or the tax liability have been materially altered or falsified
- there are grounds for suspecting the honesty of a solicitor, accountant, or any tax adviser
- the taxpayer or directors have conspired with a third party to defraud HMRC
- a Certificate of Disclosure or Statement of Assets signed during the current or an earlier investigation turns out to be false
- further offences have occurred immediately or shortly after the conclusion of an investigation
- a potentially fraudulent taxpayer is a member of either the Houses of Parliament or has a special status in the administration of justice or tax
- there is suspected fraud or evasion using the vehicle of an offshore company or other foreign entity, for example involving false invoices or monies diverted offshore
- HumInts (see HUMINT) have valuable information about a suspected fraud or substantial evasion
- cases of phoenixism.
Any of the above may indicate fraud worthy of SI’s attention when found in conjunction with one of the following:
- a significant amount is likely to be owed to HMRC. No precise figure can be given - some small frauds will be more serious than other larger frauds because of the nature and circumstances of the fraud.
- there has been a series of liquidations involving the same directors/associates or group of companies and the loss overall to HMRC is significant (see previous bullet point).
- there are grounds for believing that there has been a deliberate attempt to deceive creditors either by the creation of false documents or by the conduct of the accountant, tax adviser, insolvency practitioner or very late filing.
- cases of failure to notify chargeability or very late filing.
- cases of serious PAYE irregularities.
Overall, where there are aggravating features.
The presence of one or more of these indications does not mean that serious fraud must have occurred, nor does it mean that the case will invariably be worked by SI. Each case has to be considered in full, on its merits, with proper regard paid to limiting and mitigating factors.
Please see TTOG2130 for further guidelines.