Hansard
The vast majority of investigations carried out by Inland Revenue Inspectors are dealt with by officers working in the local tax office network. These investigations are usually resolved by negotiation and if errors have been discovered will include the appropriate taxes and National Insurance Contributions, interest and penalties. There are some firms of accountants who are able to deal with these routine investigations but generally it pays dividends to engage a specialist firm like Cobham Murphy to assist your own accountant to achieve the most cost efficient settlement with the Tax or VAT authorities.

The more serious cases are conducted by Inland Revenue Special Compliance Office - known as SCO for short - who, amongst other investigations, deal with cases of serious fraud. Serious fraud investigations are either dealt with through the Criminal Justice system or under the Hansard procedure.

A Hansard investigation usually begins with an invitation from SCO for you to attend a formal meeting at which the Hansard Extract will be read to you. It is worth noting that the inspector cannot compel you to attend a meeting with him and you should seek our advice if your accountant tells you otherwise. The text that is read out loud gets its name from the Hansard record of proceedings in the House of Commons; the extract consists of the reply to a parliamentary question about the Board of Inland Revenue's policy in relation to the investigation of fraud. The Hansard text is:-

"The practice of the Board of Inland Revenue in cases of tax fraud is as follows:-
1 The Board may accept a money settlement instead of instituting criminal proceedings in respect of fraud alleged to have been committed by a taxpayer.

2 They can give no undertaking that they will accept a money settlement and refrain from instituting criminal proceedings, even if the case is one in which the taxpayer has made a full confession and has given full facilities for investigation of the facts. They reserve to themselves full discretion in all cases as to the course they pursue.

3 But in considering whether to accept a money settlement or to institute criminal proceedings, it is their practice to be influenced by the fact that the taxpayer has made a full confession and has given full facilities for investigation into his affairs and for examination of such books, papers, documents or information as the Board may consider necessary.

There is no guarantee that the Inland Revenue will not prosecute but if a full disclosure of irregularities is made the investigation will be settled by negotiation of a money payment, which will normally include taxes, interest and penalties.

The key to all Hansard enquiries is the full disclosure. What does a full disclosure mean? It means telling the investigating inspector about any taxable sources of income or capital gains that have not previously been disclosed and about any omissions or understatements in accounts or tax returns throughout your business life. The disclosure must include all sources including sole trades, partnerships and limited companies and cover all returns made to the Inland Revenue, not only personal, partnership and company returns but also PAYE and benefits-in-kind end of year forms.