Commentary

A7.423 Steps in the investigatory procedure under COP9

Administration and compliance

A7.423 Steps in the investigatory procedure under COP9

A7.423 Steps in the investigatory procedure under COP9

There is no statutory definition of 'tax fraud' and it therefore takes its ordinary meaning of deliberate deception, dishonesty, trickery or cheating, intended to gain a material advantage1. It expressly covers an offence of which the actual, likely or intended result is either a substantial financial gain to some person or serious prejudice to the proper assessment and collection of tax. A single offence which would not by itself constitute tax fraud may nevertheless be so regarded if there are reasonable grounds for suspecting that it forms part of a course of conduct likely to result in serious prejudice to the proper assessment or collection of tax. Tax fraud is the outcome of behaviour that breaks the law. It is illegal and as such differs from tax avoidance, which involves acting within the letter but not the spirit of the law2.

Features considered by HMRC as indicating tax fraud include:

  1.  

    •     false accounts have been deliberately compiled

  2.  

    •     the taxpayer has conspired with a third party to defraud HMRC

  3.  

    •     the taxpayer suspected is a lawyer, accountant or other tax adviser

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