UK Tax Authority Issued Nearly 1,500 Production Orders To Businesses In 2015

Amisha Mehta Assistant Editor London 9 May 2016

UK Tax Authority Issued Nearly 1,500 Production Orders To Businesses In 2015

HMRC made demands to a wave of businesses last year for information on clients suspected of crimes.

In 2015, HM Revenue & Customs issued 1,468 production orders requiring businesses to provide information and documents relating to clients, or former clients, suspected of criminal activity, according to London-based law firm RPC.

The orders, which came as part of HMRC's investigations into tax evasion and money laundering, were sent by the authority's criminal investigation directorate to professionals including lawyers, auditors and accountants. 

The demands place professionals, who may be obliged to respect client confidentiality, in a “very difficult position”, RPC said. If a firm does not provide the information and documentation it holds, or provides too little, it can face criminal liability, while if it gives more information than necessary it may put itself at risk of legal claims from clients.

“Production orders can cause enormous business disruption for those who are unfortunate enough to receive one and raise difficult compliance issues. Deciding what is and what is not covered by a demand is not always easy and the potential cost of making a mistake is very high,” said Adam Craggs, partner at RPC.

“Most tax advisors and accountants will not be familiar with production orders and may be unsure of their obligations and what they should do when one lands on their desk. For example, they must not ‘tip off’ their client about an HMRC investigation. Such behaviour can have extremely serious consequences.”

HMRC have issued over 8,000 production orders over the last five years, according to the firm, and given the pressure on HMRC to increase the number of criminal prosecutions for tax fraud, the number is likely to increase.

WealthBriefing has contacted HMRC for comment and will update accordingly.

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