It has been revealed recently that HM Revenue & Customs’ (HMRC) Offshore Corporate and Wealthy (OCW) unit opened 25 criminal investigations into wealthy individuals during 2022.

The OCW is part of HMRC’s Fraud Investigation Service (FIS), which was set up following the Panama Papers leak in 2016. The unit’s brief is to target deliberate high-value tax evasion, fraud and money laundering. This focus is on a bid to protect the UK’s revenue and it looks like the OCW’s work is paying off, as in 2009/10, HMRC protected £150 million, while by 2019/20, this had risen to around £5 billion.

Investigations to date include that of BHS owner Dominic Chappell, who was sentenced to six years in jail in 2020 for tax evasion and the current case of Formula 1 boss, Bernie Ecclestone, which is likely to come to court later this year.

However, the word ‘wealthy’ might be relative in the context of the OCW unit, as investigations are aimed at individuals earning over £200,000 a year, which these days is not just the ultra-rich. That being the case, business owners who might hitherto not have strayed into HMRC’s sights could find themselves under investigation, in which case they should consider engaging the services of a appropriately experienced forensic tax accountant to help in their defence.

Being investigated by the taxman tends to be stressful at the best of times but those facing criminal charges face the prospect that not only will their business accounts be thoroughly scrutinised but also their private accounts and lifestyle are likely to be brought into the spotlight. These investigations take their toll not just on their time but also on their wellbeing, as the stress can be immense. However, having a specialist team of lawyers and forensic tax accountants can often be very reassuring.

As Roger Isaacs of Milsted Langdon explains, it is vital to ensure that those instructed have the right expertise.

He adds, “Sometimes before a prosecution, if HMRC suspects that there may have been a “serious” loss of tax as a result of tax fraud or tax evasion, it can instigate a tax investigation under Code of Practice 9. This is an extremely serious step for taxpayers who have the option of admitting their guilt and making a full disclosure in return for immunity of prosecution. Typically penalties in such cases can be substantial but many would rather pay them than face the risk of a custodial sentence and a criminal record.”

[Source IFC Review]