HMRC makes almost 1,500 demands in one year to lawyers and accountants to cough up client details
The UK's tax authority issued just shy of 1,500 demands in the space of a year to lawyers and accountants for information on clients suspected of committing crimes, figures released today show.
The research by City law firm RPC discovered the HM Revenue & Customs (HMRC) issued 1,468 production orders last year – and more than 8,000 over the last five years – to obtain information about clients or former clients of financial and professional services firms.
HMRC typically issues such orders to aid its investigations into crimes such as tax evasion.
Expressing some concern over the amount of demands made, RPC said that such orders can place advisers at odds with their duty of confidentiality to their clients and, as many orders come with a relatively short deadline, can be difficult for smaller firms to comply with.
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The order can also find firms stuck between a rock and a hard place. Firms which choose not to comply with a production order, or provide too little information to the taxman, can find themselves facing criminal prosecution, while those who hand over too much detail can find themselves being sued by their client.
"Production orders can cause enormous business disruption for those who are unfortunate enough to receive one and raise difficult compliance issues," said Adam Craggs, partner at RPC. "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.
"It can be very difficult to strike the right balance between providing HMRC with sufficient information and documentation to comply with the production order and not compromising client confidentiality by providing more information than is necessary."
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A HMRC spokesperson said: "Production orders are an important tool in HMRC’s fight against criminality and contributed to us protecting more than £2bn from attacks on the tax system during 2014/15. The work of our Fraud Investigation Service saw 1288 people – from investment bankers to tobacco smugglers and people hiding money offshore – charged with criminal offences in the same period."