HMRC’s efforts to crack down on tax evasion has led it to put an increasing amount of pressure on to accountants and other professional service firms to provide information relevant to suspected instances of evasion.
According to the law firm RPC, there were more than 1,400 requests made on behalf of HMRC to professional service providers of various sorts asking for confidential information about specific clients who are suspected of evading taxes.
The figures relate to the 12 months prior to March 31st 2018 and are being seen as part of a pattern trending towards the increased use of confidential requests in tax evasion investigations.
RPC has said that where HMRC might previously have tended towards pursuing cases of suspected tax evasion though civil forums such as tax tribunals, the Revenue is now more often pursuing criminal prosecutions instead.
As a consequence, accountants and lawyers in particular are being obliged to provide HMRC’s Criminal Investigation Directorate with potentially incriminating details about their clients’ tax affairs.
London-based RPC has said that anyone who receives any such request from HMRC should seek legal advice on the matter as swiftly as possible before submitting any response.
The firm has also described the policy at HMRC of moving ahead with criminal investigations into individuals who have used certain tax planning strategies as “concerning”.
“The mere commencement of a criminal investigation can create serious practical difficulties for taxpayers and their businesses such as, for example, lenders calling in loans,” noted RPC partner Adam Craggs in a statement.
“Such commercial damage can be irreparable for a small to medium sized enterprise,” he said.
“In addition, HMRC criminal investigations normally take several years to complete and although they frequently do not lead to a subsequent criminal prosecution, taxpayers are subjected to a great deal of stress and uncertainty whilst they await the conclusion of the criminal investigation,” Mr Craggs went on to say.
“It is of little comfort to a taxpayer to be informed that after several years of investigation, often at great personal and emotional cost for the taxpayer concerned, HMRC have decided not to pursue criminal proceedings.”