What happens during a raid by HMRC?
- TBA
- Dec 18, 2024
- 3 min read
Updated: Mar 13
For business owners in the UK, one of the most stressful events is likely a surprise visit from the tax office. Without any prior notification, they may suddenly inspect your store or any other business premises. This often happens when HMRC suspects a business of tax evasion.
According to official data, there have been 4,314 such surprise inspections by HMRC over the past five years.
These inspections are so sudden that business owners often don’t know how to respond, which can lead to mistakes, especially if they’re nervous.
Without preparation, a business could face serious consequences. So, how can you be prepared?
1.What is a ‘Dawn Raid’?
In the industry, surprise inspections are known as a ‘dawn raids’. When HMRC suspects a business of significant tax evasion, they may conduct a dawn raid. While these often happen early in the morning, they could happen at any time of day, emphasizing the unplanned nature of the inspection.
When handling most cases, HM Revenue and Customs noticed that if they planned a visit to businesses or requested necessary information through correspondence, the businesses would preemptively destroy some crucial evidence. Therefore, surprise inspections can help HMRC uncover more evidence and information.
2.HMRC’s powers during a raid
Once HMRC obtains a search warrant from the court, they assign officers to carry out dawn raids at various locations. It’s important to note that such raids are not necessarily limited to a single site. HMRC often conducts sudden searches of any premises related to the individuals or businesses under investigation. This means they can simultaneously raid a taxpayer’s residential address, business premises, and even the offices of their professional advisors.
Under the Police and Criminal Evidence Act 1984 (PACE), HMRC can apply for a search warrant to investigate suspected tax fraud.
With a warrant, HMRC must convince a court that:
A prosecutable offense has occurred
The premises may contain material valuable to the investigation
The material likely serves as evidence for criminal proceedings
The material isn’t protected by legal privilege, exclusion, or special procedure materials
If these conditions are met, HMRC has further rights during a raid, such as forced entry, searching individuals if they suspect them of carrying relevant materials, and making arrests if they suspect an individual of an offense.
3.How to respond to an HMRC Raid — Three Key Tips
Given the increasingly strict regulatory environment, the risk of a raid is real.
Such a raid can disrupt, stress, and pressure a business, but with preparation, businesses can handle the situation effectively.
Before a Raid: Preparation is Key
Develop a crisis management plan, setting out a policy for handling such inspections
Train employees on the importance of staying calm, polite, and professional during a raid
Reception, security, and IT staff may need extra training, as they’ll likely be the first to meet related officers
Conduct mock drills if necessary to familiarise staff with procedures
During a Raid: Cooperate Fully
It’s illegal to obstruct officers or attempt to destroy or hide documents or data
Have trained staff present during the inspection to monitor HMRC officers, document all actions, and note down questions and responses
Ensure officers stay supervised and that any issues or questions are promptly raised with the legal team
After a Raid: Gather Documentation and Seek Professional Advice
Obtain copies of HMRC’s notes and any documents they examined or copied
Review all records of questions and the responses provided
If necessary, seek professional advice from a tax consultant or legal advisor
You might also consider setting up an internal investigation team to audit relevant business areas and minimise future issues
Generally, after completing a raid, HMRC may take a considerable amount of time, often several years, to review the materials.