What-is-the-role-of-the-HMRC-Fraud-Investigations-Service-(FIS)

What is the role of the HMRC Fraud Investigations Service (FIS)

The HMRC Fraud Investigations Service (FIS) is a skilled team focused on uncovering tax evasion and fraud. Formed in 2015, it brought together two HMRC units – the Criminal Investigations Unit and the Special Investigations Unit – to create the FIS.

What does the Fraud Investigations Service do, and where do they fit in HMRC’s tax collection system in the UK?

The Role of HMRC’s Fraud Investigations Service

The Fraud Investigations Service holds a distinguished status within HMRC, owing to the proficiency, skill, and experience of its investigators. Their focus is on probing cases involving suspected significant tax fraud and tax avoidance, both domestically and internationally.

The consolidation of the two prior teams, including the former civil investigation of fraud team, into a single unit has enhanced cohesion within HMRC, contributing to the effective handling of major tax fraud cases.

 

Why was the Fraud Investigations Service set up?

HMRC faced government pressure to enhance results in addressing criminal and civil tax evasion and fraud. This involved cracking down on criminal gangs and reclaiming civil tax revenues lost to fraud.

Data released by international law firm Pinsent Masons illustrates the notable achievements of the FIS:

  • A £5.47 billion increase in tax revenues was achieved by the end of March 2018, marking a 6% rise from the previous year.
  • Civil tax investigations yielded an additional 13% in 2017/18 compared to the preceding year.

 

How does the Fraud Investigations Service operate?

The group focuses on probing significant cases of criminal and civil tax evasion and tax fraud, with a recent heightened emphasis on civil cases. Proposals suggesting easier access to taxpayer information from external entities like banks and accountancy practices have been put forth. Additionally, the FIS branch handling civil cases has seen expansion.

This expansion may be attributed to the fact that criminal investigations entail a higher burden of proof and are consequently more expensive. Civil investigations typically fall under either Code of Practice 8 (COPD8) or Code of Practice 9 (COPD9).

In cases where serious fraud or tax evasion is suspected, particularly involving a substantial amount of tax, Code of Practice 9 is likely to be invoked. Individuals are notified of a pending investigation under COPD9, which also extends its coverage to companies connected to the individual’s past activities.

Code of Practice 8, on the other hand, may be employed for investigations where there is initially no suspicion of fraud, although a COPD9 investigation could be initiated if circumstances change.

 

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What are the implications of being investigated by the FIS?

If you get a letter about an FIS investigation, expect to receive a Code of Practice leaflet. This leaflet outlines the reasons for the investigation and the extent of their inquiry.

The investigation may concern assets held by your business overseas, custom tax planning schemes, or intricate property matters your company is engaged in, among other possibilities.

Under a Code of Practice 9 tax investigation, you might be given the option to utilise the Contractual Disclosure Facility. This offers immunity from prosecution for any tax fraud disclosed in the facility document. 

 

Important features of the Contractual Disclosure Facility

  • This is your sole chance to reveal your involvement in tax evasion or tax fraud.
  • You must admit to attempting to deceive HMRC by providing misleading or inaccurate information or using figures known to be incorrect.
  • Full and honest disclosure of your fraudulent or deliberately misleading actions grants you immunity from prosecution.
  • False statements or disclosures may lead to prosecution if discovered later.

 

You must return the disclosure form within 60 days; otherwise, it is assumed that you reject the offer. In such a scenario, prosecution may be pursued based on the FIS investigation outcomes.

It’s crucial to grasp the potential consequences of an FIS investigation and seek expert assistance from professionals with relevant experience. Vanguard Insolvency can provide assistance in this regard, offering free same-day consultations.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.