Taxation is a very complex area involving extensive legislation and case law. Therefore it is a specialist area within both the legal and accountancy professions. Investigating tax fraud is an even more narrowly defined specialised area within this.

The complexity is the reason why arguments continually arise over the interpretation of the relevant tax statutes or case precedents. The tax payers often do not appreciate the wide ranging issues and interconnectivity between the various different taxes and duties. Add to that any international tax or offshore issues and it is easy to see how the confusion arises.

The rise in wealth and communications between businesses and individuals globally has led to a corresponding growth in the quasi legal tax avoidance industry. Tax minimisation schemes are continually being challenged by the tax authorities and new ones established in their place.

Not all challenges by the authorities are properly reasoned and they often make crass errors in their assumptions. Forensic accountancy is needed to investigate the alleged fraud or unpaid tax, unpick the assumptions and present a clear and accurate case for the tax payer to suffer a fair repayment.

Confiscation, tax evasion (or the less severe tax avoidance) and money laundering are increasingly forming much of the work for forensic accountants who specialise in fraud.

In practice often it is the case that the big career criminals have made adequate provision for their ill gotten wealth. They are able to protect themselves with their money. However, a lot of the time the authorities seem to be throwing the book at the small and accidental transgressors while the organised criminals are smiling all the way to their offshore banks!

This state of affairs is worrying and one in which the forensic accountant can assist. So long as a client’s funds are not frozen or public funding for defendants is still available, the tax fraud investigation specialists are able to mitigate the authorities’ approach in cases where they may be inappropriate or somewhat heavy handed. 

It is possible to challenge estimates of profit and business valuations carried out by HMRC as well as identifying the appropriate accounting treatment to adopt in relation to contentious areas of expenditure and provisions.