HMRC fraud investigations net more than £600m since 2016
HM Revenue & Customs’ COP8 and COP9 investigations yielded a total of £610 million for the Treasury in the financial years 2016-17 to 2018-19, according to research by Saffery Champness.
Data obtained by Saffery Champness through a freedom of information request (FOI), showed that COP8 investigations yielded £262 million and COP9 investigations yielded £348 million in the period analysed.
The accountancy firm explained that COP9 (Code of Practice 9) cases are criminal investigations launched in situations where HMRC suspects serious fraud has taken place, while COP8 are civil investigations launched when the tax authority believes there has been deliberate, but not criminal, avoidance of tax.
Data from the FOI request submitted by Saffery Champness shows that 1,473 COP9 and 924 COP8 investigations were opened in the period 2016-17 to 2018-19.
In the same period, 610 COP9 and 260 COP8 investigations were closed, resulting in a penalty charge.
Saffery Champness explained that while there is no precise correlation between cases opened and closed, the aggregate figures show that as a proportion of total cases opened, 28 per cent of COP8 investigations and 41 per cent of COP investigations were closed with a penalty.
“We have seen HMRC take an increasingly hard line on suspected avoidance in recent years,” said Zena Hanks, a partner in the private wealth team at Saffery Champness.
She warned that HMRC’s pool of intelligence is growing, as are the legal tools at its disposal.
“With the Connect System and the Common Reporting Standard, the tax man knows far more than ever before. HMRC therefore feels ever more empowered to target taxpayers where they think fraud may have been committed,” Ms Hanks said.
She added that taxpayers should also be mindful that HMRC do not always join the dots correctly and that enquiries can be opened with incorrect information.
“In these circumstances, swift action should be taken to close down any such enquiry and to protect the taxpayer from unnecessary angst,” Ms Hanks said.
According to its 2018-19 accounts, HMRC generated £34.1 billion in additional tax through efforts to tackle avoidance, evasion and non-compliance.