HMRC deals with most tax fraud through civil investigation, assessments and penalties, and keeps criminal investigation for cases where it wants a strong deterrent or where only a criminal sanction is appropriate. HMRC investigates, but the decision to prosecute is made by an independent prosecutor: the Crown Prosecution Service in England and Wales, the Crown Office and Procurator Fiscal Service in Scotland and the Public Prosecution Service in Northern Ireland.

When does HMRC choose criminal investigation over civil settlement?

HMRC’s published criminal investigation policy says its policy is to deal with fraud through the civil fraud procedures under Code of Practice 9 wherever appropriate. Criminal investigation is reserved for cases where HMRC needs to send a strong deterrent message or where the conduct is such that only a criminal sanction is appropriate. HMRC also reserves complete discretion to start a criminal investigation in any case.

The policy lists circumstances in which HMRC will generally consider a criminal rather than civil investigation. They include:

  • organised criminal gangs attacking the tax system, or systematic frauds where losses are a serious threat to the tax base;
  • where the individual holds a position of trust or responsibility;
  • where materially false statements or documents are provided during a civil investigation;
  • where an avoidance scheme relies on a false or altered document, or material facts are misrepresented to make the scheme look credible;
  • where deliberate concealment, deception, conspiracy or corruption is suspected, or false or forged documents are used;
  • money laundering, with particular focus on advisers, accountants, solicitors and others acting in a professional capacity;
  • repeat offending, a repeated course of unlawful conduct, or previous civil action;
  • a link to wider criminality.

One factor HMRC weighs is whether the taxpayer has made a complete and unprompted disclosure of the offences. HMRC’s briefing on its approach to tax fraud adds a third reason for going criminal: where civil powers are not enough to uncover the truth or recover the tax, which can justify covert techniques, searches and arrests.

How does this relate to COP9?

Code of Practice 9 is the civil alternative. HMRC’s description is that, in exchange for admitting dishonesty, paying all the tax and significant penalties, the individual will not face a criminal investigation into the conduct disclosed. It is therefore the main route by which a person suspected of fraud avoids prosecution. Making false statements during a COP9 investigation is itself listed as a trigger for criminal investigation. For how the civil process works, see our page on COP9 fraud investigations.

HMRC’s policy also names some offences where it will not usually use COP9 at all, such as VAT bogus registration repayment fraud and organised tax credit fraud.

What offences are typically charged?

The common tax offences include:

  • Fraudulent evasion of income tax under section 106A of the Taxes Management Act 1970, committed by anyone knowingly concerned in the fraudulent evasion of income tax by themselves or another person.
  • Fraudulent evasion of VAT under section 72 of the Value Added Tax Act 1994, which also covers using false documents and making false or reckless statements for VAT purposes.
  • Cheating the public revenue, a common law offence. Section 32 of the Theft Act 1968 abolished the general offence of cheating but kept it for offences relating to the public revenue.

The Finance Act 2024, section 32, doubled the maximum prison term on indictment for these statutory evasion offences from seven to 14 years, for offences committed on or after 22 February 2024. On summary conviction the VAT offence carries a fine of the greater of £20,000 or three times the VAT, or up to six months in prison.

Money laundering, fraud and the corporate offence of failing to prevent the facilitation of tax evasion can sit alongside these. See tax evasion as money laundering and failure to prevent facilitation of tax evasion.

What are the stages of a criminal tax case?

  1. Adoption. HMRC’s Fraud Investigation Service formally takes on the operation for criminal investigation. HMRC’s annual technical note defines adoption as this formal starting point.
  2. Evidence gathering. HMRC’s briefing says this can include covert techniques, searches and arrests. Our page on HMRC search warrants and raids covers the search stage.
  3. Arrest and interview under caution. The Police and Criminal Evidence Act 1984 (Application to Revenue and Customs) Order 2015 applies the PACE investigation and detention rules to HMRC criminal investigations. Under PACE Code C, a suspect must be cautioned before questions about an offence where their answers or silence may be used in evidence, and is entitled to free legal advice, including at a voluntary interview.
  4. Charging decision. HMRC passes the file to the prosecutor, who decides whether to charge. In England and Wales the Crown Prosecution Service applies the Code for Crown Prosecutors, which the Director of Public Prosecutions must issue under section 10 of the Prosecution of Offences Act 1985 to guide whether proceedings should be brought and what charges to bring. HMRC calls these positive charging decisions.
  5. Prosecution. The case is tried summarily in the magistrates’ court or on indictment in the Crown Court. The statutory maximum sentences differ sharply between the two, as the figures above show. HMRC counts pre trial guilty pleas within its prosecution figures.
  6. Sentence and confiscation. Courts can impose prison, suspended sentences, fines and director disqualification. HMRC also uses the Proceeds of Crime Act to confiscate and sell assets of people convicted of tax fraud, and failure to pay a confiscation order can lead to more time in prison.

HMRC says criminal cases can take several years from start to conclusion.

How many cases does HMRC prosecute?

HMRC’s Fraud Investigation Service technical note for 2025 to 2026 reports 494 adoptions, 626 searches, 468 positive charging decisions, 300 prosecutions, 260 convictions and 40 acquittals, a court success rate of 87 percent. There were 84 custodial sentences with an average length of 37 months, and 79 suspended sentences. The same note puts civil investigation yield at £2,092 million against £2,114 million from criminal work, which shows that civil investigation remains the main tool. HMRC warns that the yearly figures should not be read against each other because cases run across several years. See also HMRC investigation statistics.

Does a prosecution end the tax liability?

No. HMRC’s briefing says that whatever approach it takes, it always seeks to recover the money owed, through assessments, agreements, penalties and interest where possible, and through confiscation, account freezing orders and winding up where needed. A conviction does not wipe out the tax.

How might this look in practice?

Illustration only. A business owner under a civil COP9 investigation submits invoices that turn out to be forged to support expense claims. Under HMRC’s policy, false documents during a civil investigation and the use of forged documents are both circumstances in which HMRC will generally consider criminal investigation. The case is adopted, the premises are searched, and the owner is interviewed under caution. The prosecutor then decides whether to charge cheating the public revenue or income tax evasion. Had the owner made a complete disclosure under COP9 instead, the conduct disclosed would not have been criminally investigated.

What mistakes do people make?

  • Treating a COP9 letter as optional. Declining it leaves HMRC free to choose its approach.
  • Providing false or misleading material in a civil enquiry, which can turn a civil case into a criminal one.
  • Attending an interview under caution without legal advice. The right to free legal advice applies even when the interview is voluntary.
  • Assuming accountants are outside scope. HMRC’s policy singles out professionals who help move tainted money.
  • Assuming HMRC itself decides to prosecute. It investigates and refers, and the independent prosecutor decides.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.