When HM Revenue & Customs (HMRC) suspects serious tax fraud, it has the power to launch a Criminal Investigations by HMRC aimed at prosecuting offenders and recovering lost revenue. These investigations are high-stakes and can result in not only financial penalties, but also criminal convictions and custodial sentences. Whether you’re a business owner, accountant, or individual taxpayer, understanding how these investigations are initiated and handled is essential.
At The Taxcom, we specialise in defending individuals and companies facing Criminal Investigations by HMRC. Our work involves representing clients during HMRC investigations, negotiating settlements, and advising on disclosure routes like the Contractual Disclosure Facility (CDF) under Code of Practice 9 (COP9). With HMRC stepping up enforcement and using sophisticated data analysis to detect non-compliance, anyone under scrutiny must take the process seriously and seek immediate legal and tax representation.
This blog outlines:
- The types of fraud HMRC investigates criminally
- How criminal investigations differ from civil enquiries
- The triggers, process, and legal framework
- Potential penalties and outcomes
- What to do if you’re under investigation
When Does HMRC Open a Criminal Investigation?
HMRC does not initiate criminal proceedings in every case of tax irregularity. In fact, the majority of tax non-compliance is dealt with through civil investigation procedures, such as compliance checks or Code of Practice 8 (COP8). However, when HMRC believes there is evidence of deliberate and potentially criminal behaviour, it may escalate the matter to a Criminal Investigations by HMRC.
Key Triggers for a Criminal Investigation
Criminal Investigations by HMRC is launched when:
- There is evidence of deliberate tax evasion, such as knowingly underreporting income or inflating deductions
- A person has submitted false documentation, created fictitious invoices, or manipulated records
- The case involves a large sum of money, often exceeding hundreds of thousands of pounds
- There are aggravating factors, such as repeat offending, organised fraud, or abuse of position (e.g., accountants or tax agents)
- The conduct appears to involve conspiracy or facilitation of fraud by others
- A civil settlement is not appropriate due to the public interest in prosecution
HMRC may also pursue criminal charges when individuals have refused to cooperate with Criminal Investigations by HMRC, misled investigators, or attempted to destroy evidence.
Focus Areas in 2025
As of 2025, Criminal Investigations by HMRC prioritise into:
- VAT carousel fraud and Missing Trader Intra-Community (MTIC) fraud
- Self-employment Income Support Scheme (SEISS) fraud
- Payroll tax fraud, including underpayment of PAYE and NIC
- Crypto Asset and offshore income evasion
- Corporate fraud where directors deliberately misrepresent company accounts or use phoenix companies to avoid tax
With expanded data-sharing powers and technology-led risk profiling, HMRC now identifies suspect cases far more efficiently.
How HMRC Conducts a Criminal Investigation: Process and Powers
Once Criminal Investigations by HMRC proceed, it exercises wide-ranging legal powers under the Police and Criminal Evidence Act 1984 (PACE) and other statutory instruments. These investigations are not civil enquiries—they are criminal procedures with the potential for arrest, prosecution, and custodial sentencing.
Understanding the structure of an HMRC criminal investigation is essential for anyone involved, whether directly or through association.
1. Initial Intelligence Gathering
Before opening a formal criminal case, HMRC will typically undertake a preliminary review of financial activity. This may include:
- Analysing submitted tax returns
- Accessing bank data, payment records, and digital transactions
- Reviewing third-party information (from banks, employers, other government departments)
- Cross-referencing social media and digital footprints
HMRC’s Fraud Investigation Service (FIS) uses sophisticated software to detect anomalies and patterns suggestive of fraud. Once they’ve gathered enough evidence to suspect deliberate wrongdoing, a criminal investigation may be authorised.
2. Formal Investigation Initiation
If Criminal Investigations by HMRC is opened, the subject (individual or company) will often not be notified immediately. In some cases, the first indication is a dawn raid—a surprise visit involving HMRC officers arriving early in the morning to execute a search warrant.
At this stage, HMRC may:
- Seize computers, phones, and financial records
- Freeze bank accounts or assets
- Arrest individuals for questioning under caution
- Take statements and request cooperation
All interviews conducted under this stage are governed by PACE, and the individual has the right to remain silent and to seek legal representation.
3. Interview Under Caution
An interview under caution is a formal part of all Criminal Investigations by HMRC. It will typically begin with the words:
“You do not have to say anything, but it may harm your defence if you do not mention when questioned something you later rely on in court…”
These interviews are recorded, and what is said can be used in court. The subject is entitled to legal advice throughout, and the presence of a solicitor experienced in tax fraud defence is crucial.
4. Case Building and Prosecution Decision
Once interviews and evidence-gathering are complete, HMRC will decide whether to:
- Refer the case to the Crown Prosecution Service (CPS) for formal prosecution
- Offer a civil settlement (in rare circumstances)
- Drop the case if insufficient evidence exists
If prosecution is pursued, charges may include fraud by false representation, cheating the public revenue, money laundering, or conspiracy to defraud. These are serious indictable offences, carrying sentences of up to 10 years’ imprisonment.
5. Court Proceedings
If the CPS decides to prosecute, the case proceeds through the criminal courts. The defendant will appear in Magistrates’ Court initially, with more serious cases escalated to the Crown Court. HMRC will present the evidence and seek a conviction. Sentences may include:
- Custodial sentences
- Financial penalties
- Confiscation of assets under the Proceeds of Crime Act (POCA)
- Director disqualification
- Publication of the outcome (damaging to reputation)
Code of Practice 9 (COP9) and Voluntary Disclosure as an Alternative to Prosecution
While HMRC has the power to pursue criminal charges, it often offers a civil settlement route where appropriate. One such route is through Code of Practice 9 (COP9) — a procedure designed for individuals or businesses who wish to make a full and voluntary disclosure of deliberate tax fraud, in return for immunity from criminal prosecution.
Understanding how COP9 operates is critical for anyone who suspects they may have committed tax fraud and wants to regularise their affairs before Criminal Investigations by HMRC are launched..
What Is COP9?
Code of Practice 9 is issued by HMRC’s Fraud Investigation Service and applies where there is a suspicion of serious fraud. It is used to invite the taxpayer to participate in the Contractual Disclosure Facility (CDF).
Under this process, the taxpayer:
- Admits to deliberate behaviour that led to a tax loss
- Provides full details of the fraud through a disclosure report
- Cooperates fully with HMRC’s investigation
- Pays the tax due, interest, and penalties
In return, HMRC agrees not to prosecute, provided that the disclosure is complete and truthful.
When Is COP9 Offered?
COP9 might be offered before Criminal Investigations by HMRC, especially if:
- It believes it can recover tax through civil means
- There is no broader public interest in prosecution
- The taxpayer has not previously misled or refused to cooperate
Alternatively, a taxpayer may request COP9 voluntarily by making an unprompted approach to HMRC, especially if they are concerned they have committed fraud and want to avoid the risk of prosecution.
Key Benefits of COP9
- Avoids criminal conviction and court proceedings
- Allows for a structured civil resolution
- Provides a clear path to settlement and closure
- Demonstrates cooperation, which may reduce penalties
Risks of Misuse
Entering into COP9 is a serious legal undertaking. A taxpayer who enters the CDF but fails to disclose fully or attempts to mislead HMRC can have the immunity withdrawn. In such cases, HMRC is likely to proceed with criminal prosecution, and the original admission can be used as evidence.
The Role of Legal and Tax Representation
Making a voluntary disclosure under COP9 is not as simple as submitting a form. HMRC tax investigation expects:
- A detailed and professionally presented disclosure report
- A clear timeline of events showing when and how the fraud occurred
- An analysis of the tax lost
- Supporting documents to evidence calculations and facts
At The Taxcom, we represent clients through the entire COP9 process — from initial strategy to final settlement. Our approach ensures disclosures are accurate, complete, and strategically prepared to protect our clients’ interests.
What to Do If You’re Under HMRC Criminal Investigation
If you have reason to believe that Criminal Investigations by HMRC are unfair or a tax fraud — or if you have already been contacted, interviewed, or subjected to a search — it is critical to respond strategically and with the support of professional advisers. Criminal tax investigations are not simply financial matters; they carry serious legal consequences, including potential prosecution, fines, and imprisonment.
At The Taxcom, we assist individuals and companies in responding to Criminal Investigations by HMRC from the very first contact, ensuring their rights are protected and the best possible outcome is pursued.
Recognising the Signs of a Criminal Investigation
Some people discover they are the subject of a criminal investigation through obvious events, such as:
- A dawn raid involving HMRC officers executing a search warrant
- Being arrested or detained
- Receiving an invitation to attend an interview under caution
- Having bank accounts or assets frozen
- Being informed by a third party (e.g. a bank or accountant) that HMRC has made enquiries about them
Others may have indirect indications, such as unusual questioning during a routine compliance check, requests for historical data, or sudden interest in personal or business affairs going back several years.
Immediate Steps to Take
If you are under Criminal Investigations by HMRC, do not delay. The following steps are essential:
1. Seek Legal Representation Immediately
Do not engage with HMRC directly or attend an interview under caution without a qualified solicitor present. Anything you say can and will be used in legal proceedings. Early representation is essential to protect your legal position.
2. Do Not Destroy or Alter Records
Tampering with documents, deleting files, or attempting to interfere with evidence can be treated as a separate criminal offence and significantly worsen your position.
3. Preserve All Communications
Retain all correspondence from HMRC. These documents may include important deadlines, disclosures, and legal rights. They will form part of your defence strategy and overall case analysis.
4. Do Not Make Assumptions About Your Liability
Even if you believe Criminal Investigations by HMRC is unjustified, refrain from attempting to explain or justify the position without legal advice. Innocent mistakes may appear deliberate when viewed through a criminal lens, especially if poorly presented.
Legal Representation and Strategy
At The Taxcom, we:
- Engage with HMRC on your behalf
- Analyse the basis of the investigation
- Determine whether a voluntary disclosure under COP9 may still be an option
- Represent you during interviews under caution
- Develop a comprehensive defence strategy, including tax analysis and legal representation if the matter proceeds to court
If the investigation can be resolved through civil channels, we negotiate structured settlements. If prosecution is likely, we focus on limiting exposure, protecting assets, and safeguarding reputation.
Frequently Asked Questions (FAQs)
1. What is the difference between a civil tax enquiry and a criminal investigation by HMRC?
A civil tax enquiry is a routine check into errors or discrepancies in a tax return, often resolved through financial settlement. A criminal tax investigation is pursued when HMRC suspects deliberate fraud and is seeking prosecution. Criminal cases may result in arrest, trial, and a custodial sentence.
2. What powers does HMRC have during a Criminal Investigations by HMRC?
HMRC has extensive powers under the Police and Criminal Evidence Act 1984, including the authority to conduct searches with a warrant, arrest suspects, seize assets, freeze bank accounts, and interview individuals under caution. These powers mirror those of the police.
3. What should I do if I receive a letter from HMRC inviting me to a COP9 disclosure?
You should seek legal advice immediately. Do not ignore the letter or attempt to handle it alone. HMRC expects a full and honest disclosure within 60 days. Mishandling the process could result in the offer of immunity being withdrawn and a criminal prosecution being launched.
4. Can I voluntarily disclose tax fraud to HMRC before they contact me?
Yes. You can make an unprompted disclosure to HMRC under COP9 if you believe you have committed tax fraud. This can significantly reduce penalties and offers protection from prosecution—provided the disclosure is complete and truthful. The process must be managed by professionals.
5. What are the potential penalties for criminal tax fraud?
Penalties vary depending on the offence, but may include:
- Custodial sentences (up to 10 years for serious offences)
- Unlimited fines
- Asset confiscation under the Proceeds of Crime Act (POCA)
- Reputational damage and director disqualification
- Publication of the offence as part of deterrence measures
6. Can HMRC investigate historical tax affairs?
Yes. Criminal Investigations by HMRC can go back up to 20 years in cases of deliberate tax fraud. In criminal cases, there is no formal time limit on investigations if HMRC suspects dishonesty or concealment.
7. Do I have to answer questions during an HMRC interview under caution?
No, you have the right to remain silent and the right to legal representation. Anything you say can be used as evidence in court. It is strongly advised that you do not attend any such interview without a specialist tax solicitor.
8. Can HMRC investigate my accountant or adviser as well?
Yes. If HMRC suspects that an accountant, bookkeeper, or adviser facilitated the fraud, they may be subject to a separate investigation, including prosecution under conspiracy to defraud or knowingly assisting in a fraudulent scheme.
How The Taxcom Can Help
Facing a Criminal Investigations by HMRC is one of the most serious situations a taxpayer can encounter. The implications are not just financial — they extend to your liberty, professional standing, and long-term reputation. At The Taxcom, we specialise in defending individuals and businesses under investigation for tax fraud, offering strategic, informed, and confidential advice from the very outset.
Our team includes experienced tax consultants and criminal defence solicitors who understand both HMRC procedures and the criminal justice system. We act quickly to assess your legal position, manage risk, and communicate with HMRC on your behalf. Whether you’ve received a COP9 letter, been invited to an interview under caution, or subjected to a dawn raid, we ensure that your rights are protected and that your case is handled with the highest level of precision and care.
We also advise clients who wish to make voluntary disclosures, helping them access the Contractual Disclosure Facility to avoid prosecution where possible. From negotiating civil settlements to preparing robust defences in court, we’re committed to securing the best possible outcome for our clients.
If you are under investigation or suspect you may become a target of HMRC’s criminal enforcement, Contact us today. The sooner we’re involved, the more we can do to protect you
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