PKF Criticizes HMRC Regionalization Of Fraud Enquiries

by Robin Pilgrim, LawAndTax-News.com, London

06 July 2006

UK advisory firm PKF says that HMRC's plan to transfer some tax fraud investigative work to regional offices will have a negative impact for taxpayers.

As from 1 July, HMRC is transferring some tax fraud investigations work from its Special Civil Investigations (SCI) offices to new teams in 11 locations dealing with Civil Investigations of Fraud (CIF). The new CIF teams will be charged with investigating cases of serious fraud – not routine enquiries – but the SCI will still handle the larger cases.

John Cassidy, tax partner at PKF accountants and business advisers, said: “In our experience, tax fraud investigations handled by HMRC officers in local offices are dealt with in a very formulaic way and one often gets the impression that the investigating officer is simply following a checklist. This is risky and could lead to the enquiry being handled in an inflexible way which, in some circumstances, can put inappropriate and unacceptable pressure on the taxpayer.”

HMRC held a joint meeting with tax investigation practitioners last summer to review how it deals with investigation of tax fraud under the redrafted Hansard procedures. These allow tax investigations to be carried out without the threat of direct criminal charges. HMRC was warned that downgrading fraud investigations to less experienced officers would not be a success but it has gone ahead and done it anyway.

Announcing the change, HMRC said it intends to handle more tax fraud investigations using newly trained CIF teams.

John Cassidy said “This just emphasises how much work SCI offices are having to deal with now that HMRC is obtaining more and more information on suspect taxpayers through bulk exercises such as obtaining details of offshore bank accounts from the banks. While It makes sense to prioritise large and complex cases, I fear that a large number of taxpayers suspected of tax fraud will be investigated by inexperienced staff blindly following set procedures. Tax fraud investigations are rarely straightforward and ought to be investigated by experienced personnel who deal with such issues on a daily basis. Anyone facing a CIF enquiry is being accused of a serious criminal offence and will need expert advice to ensure they are properly handled”.

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