As it pivots towards administering the schemes aimed at helping businesses and individuals through the COVID-19 crisis, press reports indicate that HM Revenue & Customs has had to pause some investigations. In practice, in many cases this means that it is either not responding to correspondence from subjects of investigations or not pressing them for information or documents required of them.
However, at this stage at least, it has suspended rather than discontinued investigations. It has not given any indication that it intends permanently to abandon ongoing investigations or to reduce the numbers it commences in due course. Those who are, or may become, subject to investigation should expect that normal service will be resumed when demand for government financial support declines as the crisis subsides.
Indeed, HMRC has affirmed its commitment to enforcement in the longer term, both in terms of what it may consider to be opportunistic fraud in relation to emergency schemes and other evasion activity which may have the effect of diminishing public funds. Other enforcement authorities, for example the Financial Conduct Authority, have been equally clear that whilst immediate enforcement activity may not be on the cards in the current strained circumstances, they are keeping a careful note of how businesses and individuals conduct themselves and that any behaviour that could be construed as an attempt to capitalise on the current circumstances or to undermine authorities’ or others’ efforts to act for the greater good may well lead to action in due course.
Current pauses in enforcement activity should be regarded as just that. Sympathy and forbearance are currently at uncommonly high levels. Decisions taken in the current maelstrom are likely to be viewed less charitably and with the benefit of hindsight by investigators looking at them years later.
In this environment, and particularly given the inevitable ambiguities inherent in rapidly-drafted legislation, emergency schemes and temporary changes to regulatory arrangements, careful record keeping becomes even more important than usual. It is crucial that when the inevitable resumption and probable bounce in enforcement activity occurs, businesses and individuals are able to justify decisions and actions taken (or not taken) in order to avoid interacting with HMRC or other enforcement authorities in quite different circumstances in future.
HMRC will always take tough action against fraudsters who attempt to deprive the UK of the public funds the government needs to support the nation at this difficult time.