HMRC used 875 production orders in the 12 months to 31 March 2021 to compel professional advisers (including tax advisers, lawyers and accountants) to disclose information relating to clients suspected of being involved in tax evasion. Production orders require approval of the criminal courts, and HMRC requests had fallen to 827 in the previous tax year as resources were diverted elsewhere during the pandemic, for example to administer the job support schemes.
The data, produced by international law firm RPC, suggests that HMRC is increasing compliance activity with a particular focus on addressing tax evasion. RPC notes that, following the end of the job retention scheme on 30 September 2021, compliance is likely to return as a key focus – with HMRC under renewed pressure from the Treasury to reduce the tax gap and increase the tax yield.
The firm also notes that widespread concern around abuse of the job support schemes could see increased use of HMRC’s criminal powers.
Adam Craggs, partner and head of tax, regulatory and financial crime at RPC said: ‘HMRC views production orders as an effective way to gather information. However, such orders can place advisers in a difficult position and complex issues regarding confidentiality and legal professional privilege often arise and such issues require careful consideration.
‘Firms issued with a production order must ensure they provide HMRC with the necessary information to avoid criminal sanction, but also need to be careful that in doing so, they do not breach the duties they owe to their clients. Any breach of such duties could lead to them facing a legal claim from their clients. It is important that anyone who receives a production order obtain expert legal advice as soon as possible.
In contrast with the position during the pandemic, back in 2016 RPC reported that HMRC had issued over 8,000 production orders in the previous five years.
HMRC used 875 production orders in the 12 months to 31 March 2021 to compel professional advisers (including tax advisers, lawyers and accountants) to disclose information relating to clients suspected of being involved in tax evasion. Production orders require approval of the criminal courts, and HMRC requests had fallen to 827 in the previous tax year as resources were diverted elsewhere during the pandemic, for example to administer the job support schemes.
The data, produced by international law firm RPC, suggests that HMRC is increasing compliance activity with a particular focus on addressing tax evasion. RPC notes that, following the end of the job retention scheme on 30 September 2021, compliance is likely to return as a key focus – with HMRC under renewed pressure from the Treasury to reduce the tax gap and increase the tax yield.
The firm also notes that widespread concern around abuse of the job support schemes could see increased use of HMRC’s criminal powers.
Adam Craggs, partner and head of tax, regulatory and financial crime at RPC said: ‘HMRC views production orders as an effective way to gather information. However, such orders can place advisers in a difficult position and complex issues regarding confidentiality and legal professional privilege often arise and such issues require careful consideration.
‘Firms issued with a production order must ensure they provide HMRC with the necessary information to avoid criminal sanction, but also need to be careful that in doing so, they do not breach the duties they owe to their clients. Any breach of such duties could lead to them facing a legal claim from their clients. It is important that anyone who receives a production order obtain expert legal advice as soon as possible.
In contrast with the position during the pandemic, back in 2016 RPC reported that HMRC had issued over 8,000 production orders in the previous five years.
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