Criminal Prosecutions

Criminal prosecutions for tax offences are very uncommon. We are normally able to dispense with any concerns that anxious callers make to us. If there is a genuine prosecution risk we will be able to introduce you to solicitors and Counsel who we know to be competent in this unusual area of law. We have been instrumental in stopping tax prosecutions from proceeding and in other cases our input has materially reduced both custodial sentences and the quantum of funds recovered by the Crown using Confiscation Proceedings.

HM Revenue and Customs have been subject to very considerable criticism for failing to underpin the tax system with sufficient numbers of well publicised criminal prosecutions. Whilst there is an articulated Prosecution Policy, the practical reality is that determined tax evaders have been able to ignore the authorities with very little risk of prosecution. Now that HM Revenue and Customs Prosecution Office has been absorbed into the Crown Prosecution Service , as what is widely thought to be a cost cutting measure, there is an expectation that tax related prosecutions will be confined to very straightforward cases with high prospects of conviction.

It was not until Finance Act 2000 that a criminal offence of "Fraudulent Evasion of Income Tax" actually existed on the statute books. Historically, the Inland Revenue had used "Common Law Cheat" as the preferred vehicle for prosecutions; which in many respects this is still important for cases involving taxes other than Income Tax. However, Section 144 Finance Act 2000 has been used increasingly by Revenue and Customs Prosecution Office (which is technically a separate entity to HM Revenue and Customs) to deal with long term evasion in the so called "Black Economy". The vast majority of prosecutions relate to fraudulent claims for Working Family Tax Credits.

It is anticipated that sample prosecutions will have to be brought against parties with offshore banking facilities who do not take advantage of the New Disclosure Opportunity (see separate tab). There will also be a handful of prosecutions of individuals who make materially deficient disclosures under the terms of that scheme.

HM Revenue and Customs reserve the right to either deal with investigations on a civil or criminal basis. Their policy statement indicates that prosecution is more "likely" where one or more of the following elements is present:

  • materially false statements are made or materially false documents are provided in the course of a civil investigation;
  • deliberate concealment, deception, conspiracy or corruption is suspected;
  • using false or forged documents;
  • previous tax evasion offences or there is a repeated course of unlawful conduct or a previous civil investigation;
  • People in positions of trust or responsibility (for example a Chartered Accountant or Solicitor);
  • Reliance is placed on false or altered documents or material facts are misrepresented to enhance the credibility of a tax avoidance scheme;
  • Systematic frauds where the tax evaded represents a serious threat to the tax base, including conspiracy;

Criminal investigations have to be undertaken in accordance with the Police and Criminal Evidence Act. Interviews have to be recorded and a formal "caution" administered. If you are being investigated on a criminal basis you will need a solicitor to represent you. This is an arena where Hector Hector excels. We work very regularly with solicitors in this unusual area of law and we will be able to assist you initially to ensure that you are competently represented.

Aside from the reputational aspects and a custodial sentence, Confiscation Proceedings will be brought under the Proceeds of Crime Act and the financial consequences of this are potentially ruinous. Hector Hector have acted in landmark Confiscation cases and we are accustomed to giving evidence in the High Court and the Court of Appeal.