19% jump in HMRC demands to accountants and other professional advisers for confidential information on clients suspected of tax crimes
There was a 19% increase in the number of HMRC requests to professional services firms for confidential information on clients it wants to investigate for suspected tax crimes.
RPC says that HMRC’s Criminal Investigation Directorate will seek a ‘production order’ to compel professional services firms, such as accountants, to disclose confidential information relating to their clients who are suspected of tax fraud.
In 2015, HMRC was given an extra £800m in funding to help meet a target of tripling the number of criminal investigations into tax crimes by 2020. This has resulted in firms facing an increased threat of criminal investigation as HMRC looks to sharply increase the number of criminal convictions it secures.
RPC says that firms issued with a production order can struggle to balance the need to provide HMRC with the requested documentation whilst at the same time ensuring they do not breach their duty of confidentiality owed to their clients. Firms can face criminal liability for failing to comply with a production order, but they also risk a legal claim from their clients if they provide too much information to HMRC.
Adam Craggs, Partner at RPC, says: “The increase in production orders is a way of HMRC sending a clear message to those under investigation.”
“While it is quick and easy for HMRC to issue these orders, it is a huge burden on professional services firms. These investigations can take several years to complete and can cause serious business disruption to both suspects and their professional advisers.”
“It is important that anyone who receives a production order seeks legal advice from a lawyer with the necessary expertise in this area as soon as possible. The consequences for professional advisers who either fail to comply with a production order, or provide information to HMRC which they are not required to hand over can be very serious.”