The vast majority of tax investigations conducted by HMRC are on a civil basis as opposed to a criminal basis. HMRC have a Criminal Investigations Policy which it follows – by default, all other challenges will be on a civil basis.
It is important that all the relevant facts are identified. Not all challenges by HMRC result in any additional income or gains being identified.
A successful challenge by HMRC on a criminal basis will result in the taxpayer having a criminal record. This is irrespective as to whether it is a custodial sentence or a suspended sentence.
A successful on a civil basis will result in any additional tax, interest and penalties being included in a Settlement.