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Risk and Intelligence Service

By admin
01 Mar 2016
Tax Investigation

Enquiries are not random. They can’t be. A random approach would be a complete waste of taxpayer resources, HMRC’s time and incur unnecessary professional costs, which would probably result in increasing complaints.

Selection is always based on criteria and that criterion is always being refined. Understanding how HMRC’s Risk and Intelligence Service (“RIS”) works will assist deterring the belief that an enquiry is random.

RIS is responsible for:

  • Collating information
  • Identifying those operating in the hidden economy
  • Receiving and exchanging information with other Government Departments
  • Researching and identifying campaign and taskforce targets

Risk and Intelligence Service through Connect can automatically:

  • Link all Government sourced information to a taxpayer including land registry, planning consents, border agency, DVLA, Companies House, Council Tax, Business Rates, PAYE/corporation tax/VAT/CIS, Import and export records
  • Compare taxpayer/business profiles to identify those that are similar but don’t appear to perform as well
  • Review employment records, which can also assist to profile a business as well as identify those operating by using “self-employed” persons who may actually be employed
  • Analyse lifestyle
  • Connect taxpayers to entities
  • Connect bank accounts
  • Obtain thirds party information from sixteen broad categories including employers, banks, insurance companies, financial institutions, brokers, auctioneers, estate agents and charities
  • Collate social media information

Apparently, Risk and Intelligence Service considers risk on a national level rather than a local one and builds information packages to help investigators pursue enquiries. It is anticipated that risks are identified and applied nationally resulting in local HMRC offices opening enquiries within specific boundaries. Not very random at all!

It is wise to know what HMRC have because it surely affects the judgement to make a disclosure of tax irregularities. Not only will an unprompted disclosure assist greatly in reducing penalties but if managed correctly, a taxpayer can be protected against criminal prosecution. This protection will be increasingly desired given the prosecution target has doubled since last year and new sanctions are introduced from 6 April 2016, including:

  • A strict liability criminal offence for offshore evasion
  • Criminal offence for failure to prevent or the facilitation of tax evasion
  • Increase the financial penalties faced by evaders
  • Introduce new civil penalties on those who enable evasion so they will face the same penalty as the tax evader
  • Publicly name and shame both evaders and those who enable evasion

It is no surprise then that HMRC’s compliance department has had a little reorganisation to include:

  • Accommodating criminal investigators sitting within the department
  • Prosecutors are involved in cases at the beginning
  • Each enquiry has the ability for internal guidance from both criminal investigators as well as prosecutors

Policy is directly linked to deter evasion by prosecuting in situations that the widespread public can relate to. A “simple” or “random” enquiry whether personal, corporate, VAT or PAYE should always been taken seriously at the outset.

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