In April 2010, the Crown Prosecution Service (CPS) joined forces with the Revenue and Customs Prosecution Service and created a Central Fraud Division with an aim to increase the amount of prosecutions for tax evasion. This has been a highly successful merger with more cases going to court and being successfully prosecuted than ever before.
If you have been notified that you are under investigation for money laundering or other tax offences, then you should expect that the police, CPS and HMRC will all work together to the best of their ability to determine whether you should face trial or punishment and work to collect any fines or tax owed.
What to expect in an investigation?
Once HMRC decides to begin an investigation, you will be served notice via a COP9 letter. This letter will inform you of what HMRC will be looking at and outline their reasons for their suspicions. At this early stage, you may want to enlist the help of a tax accountant with experience dealing with COP9 investigations. You will want the expertise, help and advice to see you through this investigation. Tax Accountants, specialist in this field, will be able to explain the process with you and advise you on the best course of action to take.
HMRC and the police will work together and use forensic accountants to work through your accounts, banking and tax declarations to look for discrepancies, schemes and any hidden income. If you are hiding anything or know that you have misrepresented your earnings and therefore miscalculated your tax; you should disclose this to HMRC before things go any further. The longer you leave it, the worse the penalties will be, so it’s essential that you are as upfront and honest as you can be – even if this means admitting mistakes.
What will the CPS do?
If HMRC finds that you have illegally laundered money or are purposefully avoiding tax, then they will take their evidence to the CPS. The CPS will decide if they will bring a legal case against you, but specialist prosecutors from the Central Fraud Division will have been involved with your case from the start and have an in-depth understanding of the evidence. Currently, HMRC and the CPS are under pressure to make examples of those who have been found avoiding tax in order to put others off using similar schemes. Therefore, if found guilty of tax evasion or money laundering you are likely to face a hefty fine and possible jail time, as HMRC and the CPS are keen to crack down on this behavior.
If you are under a COP9 investigation, then it is advisable to seek professional help and advice as soon as possible and be honest with the HMRC and CPS investigators to help bring your case to a positive conclusion. This could help not only save your business from hefty fines but could also save you facing a prison sentence for tax evasion.