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HMRC SI offices are spread across various cities throughout the UK. Formerly known as Special compliance Office and then Special Civil Investigations, the latest identity change carries the full title “Special Civil Investigations (Fraud and Avoidance)”.

As the name suggests, this part of HMRC investigates both fraud and tax avoidance – the former usually under civil procedures covered by HMRC’s Code of Practice 9 and the latter under Code of Practice 8 . When HMRC decide to prosecute someone for tax fraud, this will be dealt with elsewhere but SI may nevertheless be investigating cases in which prosecution remains a possibility. Great care is needed in all such cases.

When Code of Practice 9 has been agreed, HMRC will not prosecute as long as full disclosure is made of all irregularities. This gives the taxpayer the opportunity to commission a detailed report covering his or her affairs with the expectation that there will be a financial settlement to cover the tax VAT, NIC and other duties plus interest and penalties. We specialise in producing reports of this nature. It is clear that HMRC will consider prosecuting anyone whose report is incomplete or misleading so it is important to get this right.

SI offices also investigate suspected tax avoidance. For marketed tax schemes with promoters this will often be on a co-ordinated basis using a sampling approach. SI will also take the initiative to investigate certain industries or sectors where tax irregularities are suspected on a wide scale, and there are specialist units investigating offshore structures with interests in the UK. When a tax avoidance structure fails because things are not as described to HMRC, it is quite possible that an investigation may become criminal. It used to be the case that code of Practice 8 was reserved for cases in which tax fraud was not suspected, but now HMRC SI will investigate cases under Code 8 that may still result in a prosecution.

SI inspectors tend to be well-informed, technically expert and tenacious. If SI are interested in you or your client the matter should be taken seriously and expert help is advisable.