HMRC launched 278 tax evasion investigations during lockdown

HMRC opened 278 civil investigations into suspected tax evasion during the first 10 months of the pandemic, research from UHY has shown.

These proceedings, otherwise known as Code of Practice 9 enquiries (Cop9) are launched in relation to taxpayers who are suspected of committing serious tax fraud, such as deliberately paying less tax than is due, or mis-claiming government grants.

If an individual who is the subject of a Cop9 enquiry agrees to fully cooperate with HMRC, they are eligible to receive immunity from criminal prosecution. Otherwise, many of the crimes under investigation could result in serious penalties and jail time for those who committed the crime. 

Even with immunity, financial penalties imposed under these investigations can add up to 200 per cent of the tax HMRC believes it is owed. UHY advised anyone who is the subject of a Cop9 enquiry to request to make a disclosure and voluntarily enter into a Cop9 agreement with HMRC. 

Taxpayers who have deliberately misrepresented their affairs are likely to have a more favourable outcome if they fully co-operate with HMRC.

“HMRC is throwing taxpayers a lifeline by issuing these Cop9 enquiries. It’s an opportunity for those who know that there are serious misgivings within their tax affairs to bring this to light and avoid the possibility of a substantial prison sentence,” Sheila Berry, partner in UHY’s Manchester office, said.

But HMRC only offers a Cop9 deal for a brief window of time. 

“Tax evaders who receive an offer shouldn’t ignore it. If they do spurn the approach from HMRC then they could find themselves facing a full-blown criminal prosecution.” Ms Barry said.

Investigations launched by HMRC can date back as far as 20 years, but it’s believed the recent spate of enquiries may be related to suspected furlough fraudsters, according to UHY.

Under a Cop9 procedure, taxpayers are required to provide details of the amount of tax they have evaded, which saves HMRC from having to enter into criminal proceedings and use its resources to investigate the matter.