FAQs
Common questions when being investigated
What does Code 8 mean?
What does Code 9 mean?
What are my obligations under Money Laundering Reporting Rules?
What if no Code of Practice has been received by me?
How are penalties worked out?
How long does the investigation last?
Can I go to prison for tax offences?
Is it in my interests to prepare a disclosure report?
What does Code 8 mean?
Code 8 cases are handled by the Avoidance Group of HMRC and indicate that there is no suspicion of serious fraud.
What does Code 9 mean?
Code 9 indicates that HMRC suspects serious fraud but they are still seeking a monetary settlement rather than prosecution. these cases may be dealt with by CIF or SI teams.
Common questions when being investigated
What are the firm's obligations under Money Laundering Reporting Rules?
In February 2006, following substantial lobbying by the accountants professional bodies, a significant change to the Money Laundering Reporting rules became relevant for tax investigation practitioners.
Following the change in the rules, it is now possible for advisors to have meetings with individuals who have irregularities on their tax affairs in strict confidence. Because these meetings will be to advise on tax legislation and "how to put things right", such meetings will be bound by the equivalent of legal professional privilege for these purposes and consequently it will be illegal for any contents of that meeting to be disclosed under the Money Laundering reporting rules.
This brings the status of the Accountants and Lawyers in this regard to an equal footing and should allay concerns of individuals who would have liked to talk to us on a confidential basis but were concerned about our professional reporting requirements.
The professional bodies have pointed out that this privileged status may not be available to your regular general practitioner accountant and care should be taken before entering into such discussions so that your own position is protected.
What if no Code of Practice has been received by me?
this usually means that HMRC are seriously considering prosecution.
How are the penalties worked out?
penalties can be levied up to a maximum of 100% of the tax due. Thelevel of penalty will be determined by the behavior that gave rise to the tax irregularities.
- If reasonable care was taken; no penalty
- If there was careless behaviour; 0-30%
- Deliberate misstatement; 20-70%
- Deliberate misstatement, subsequently concealed; 30-100%
How long does the Investigation last?
most investigations undertaken by the CIF/SI last between 12 and 18 months although recently there has been an effort to reduce this to 6 months.
Can I go to prison for tax offences?
HMRC can prosecute and people have served jail terms for tax offences. However provided a full confession of tax irregularities is made, and the Code of Practice 9 is offered, HMRC will not prosecute.
Is it in my interests to prepare a Disclosure report?
Usually yes. these are generally only suggested for CIF/SI investigations and are standard in all Code of Practice 9 investigations. However, we would advise using a firm such as ours, which has previous experience of preparing such reports.