Understanding tax affairs and investigations
HM Revenue and Customs (HMRC) is responsible for monitoring the evasion of taxes and employs a variety of tools to investigate any suspected illegal activity: this includes detailed examination of tax affairs and investigations which can lead to criminal liability.
Tax cases are immensely complex and should be entrusted to recognised specialist lawyers. At Bright Line Law we hold an enviable reputation for our expertise in dealing with suspected tax offences. We have particular experience of representing clients before tax tribunals as well as exploring other opportunities to prevent a matter from reaching the public domain and causing unnecessary reputational damage.
The distinction between tax evasion and tax mitigation has become increasingly blurred in recent years. While the latter is allowed, tax avoidance schemes, following investigation by HMRC, can be deemed tools for illegal tax evasion. If HMRC is investigating such a scheme, or it appears that civil litigation is a prospect following an investigation, it is important to take expert legal advice on the available options. Taxation is complex and constantly changing, and sanctions for breaches of tax rules are weighty with long term implications for a business’ continued financial stability and individuals’ financial comfort and personal liberty.
We regularly work with other leading barristers and experts in the field of tax law – including forensic and chartered accountants, as well as professional tax advisors – to assist clients and deliver pragmatic solutions to legal problems. Our goal is to resolve regulatory issues quickly and provide a rigorous defence to accusations of violations of tax law.
If you or your business have been approached by HMRC regarding your tax affairs, or need guidance on how to defend allegations for having committed a crime, get in touch with a specialist who can guide you smoothly through the process.
Businesses need to observe the regulations relevant to their industry. This can bring them into contact with regulators, either by reporting on their progress in observing regulatory standards or facing an investigation on suspicion that the regulator’s code of practice has been breached. Regulatory investigations can be taxing experiences for businesses and their staff: there is often a lack of understanding in the approach that regulators take, in which direction their investigation is going and how best to manage interaction with them.
Our team can act as advisers to businesses facing external investigation by regulators (HMRC, the FCA and the full range of professional regulators), or pursuing internal investigations. We are able to provide detailed guidance and support to clients on any aspect of regulation. If you need to speak with a legal team that can provide cost-effective, pragmatic advice on regulatory investigations we would be delighted to help.
Understanding the regulator’s approach
Businesses operating in the financial sphere in the UK need to be conscious of the obligations they owe to regulators. The UK operates one of the most comprehensive and robust regulatory frameworks in the world, which has contributed to its global reputation as a financial hub. This is supported by a legal regime that can result in civil or criminal liability for businesses that are found to have conducted activities which threaten to undermine it.
We understand what our clients face in discharging their regulatory obligations, and the challenges they may encounter when presented with the prospect of an investigation.
Businesses undoubtedly operate in a competitive environment which puts tremendous pressure on them to secure new opportunities as quickly as possible. Enforcement bodies will look to follow a ‘paper trail’ to demonstrate illegal activity. This process needs to be managed carefully and demands for information need to be met by careful analysis by advisors who are able to ensure salient information is disclosed. Penalties for fraudulent or corrupt behaviour are varied and depend on the situation, but can result in either major fines being issued or imprisonment where individuals are concerned.
Behaviour in the financial marketplace
The FCA is tasked with monitoring business compliance with financial regulations and criminal law. It has the power to conduct interviews with staff to understand the context of a suspected infraction, and it can confiscate business-owned property and paperwork in the course of its investigation. Any evidence of a breach of business’ duties to the FCA not only threaten their reputation in the market, but could also damage the continued ability of individuals to work in financial services.
HMRC has powers to conduct forensic examinations of tax affairs through a variety of procedures, including detailed interviews with individuals, analysis of past activities and court orders for the production of information and paperwork. Any evidence of a failure to pay taxes or attempts to reduce or mask tax liability could have major consequences. Sanctions from HMRC can include financial or criminal penalties.
Most businesses take their regulatory responsibilities seriously and will conduct internal investigations if they suspect wrongdoing. This may involve detailed discussions with personnel or reviewing files over an extended period of time to establish the state of affairs. The difficulty is in understanding how to manage investigations appropriately, ensuring that regulatory concerns are addressed while safeguarding the commercial position of the business.
Our experience of advising clients across the financial sector in their dealings with regulators grants us insight into how they work: we can quickly identify a regulator’s concern and then plan to best address this. We can also oversee an internal investigation, acting as the ‘gatekeeper’ in the event that external organisations need to become involved. At Bright Line Law, we understand that investigations, whether internal or external, can be incredibly taxing on business resources and time.