SCI and its current activities
The Special Civil Investigations Office (SCI) is staffed by extremely skilled, highly trained and experienced investigators. It concentrates only on the most serious enquiries. Considerable sums of money are usually at stake.
SCI investigations do not just concentrate on suspected serious tax fraud, they will also cover cases where there are simply large amounts of unpaid tax thought to be due. At the end of the investigation there is also likely to be a financial penalty to pay (as well as tax and interest) which can be as much as 100% of any additional tax owed.
The current trend is to concentrate on “high risk” areas: business sectors where HM Revenue and Customs believes that the right amount of tax may not have been paid. The latest initiative involves additional funding of £155million to boost investigation work (a significant increase from the £66million announced the year before) with the aim of collecting additional tax revenue of at least £1.7 billion over the next three years. The authorities say they will target resources at the high-risk areas they have identified. Other relevant issues are:
- additional “counter-fraud investigators” being recruited across the entire country;
- use of SCI staff in a mentoring scheme to improve the investigation skills of local tax inspectors;
- more sophisticated collection and analysis of data to benchmark financial results, so that HMRC know what profit a business ought to be making;
- a “complex personal return” team has been established for individuals with even moderately complex tax affairs. HMRC has stated that this will enable investigators to get an overview of their affairs and assess whether there may be more than meets the eye;
- closer working between the law enforcement arms of former Customs and Excise and the HMRC.
The key to success for the tax authorities is co-ordination of intelligence and resources. Different types of investigation are now being combined (for example, SCI and PAYE auditors are now working together) or undertaken consecutively. If adjustments are found during a PAYE audit, HMRC may consider that errors will also be found in other tax areas. The point is that “intelligence” will certainly be passed on to other officials, for example corporation tax inspectors, who can then consider what might be wrong with the business’s tax computations. A further enquiry could therefore follow, leading to more tax (and interest and penalties) to pay, as well as a significant amount of extra time and effort being spent by the business.
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