Hundreds of thousands of people now face a tax crackdown

Reg Day, the national director of tax investigations at KMPG, details different forms of investigation:

If your affairs are dealt with by a local office you will get a letter advising you that your personal tax return is under enquiry.

This letter will be accompanied by a booklet called Code of Practice 11.

HMRC may refer to the enquiry being conducted under a section of the Taxes Act called s9A.

Personal tax enquiries are either "aspect" with questions concerning specific entries on the tax return, or "full" .

These involve questions about a number of entries on the whole return, a review of all underlying books and records, and a request for a meeting with the taxpayer.

The first indication that will make a taxpayer aware that HMRC intend to undertake a suspected serious fraud investigation, using the Civil Investigation of Fraud procedure, is a letter inviting them to a meeting.

This will include a booklet called Code of Practice 9 Cases of Suspected Serious Fraud

Under HMRC's procedure, the taxpayer will be given an opportunity to make a full and complete disclosure of all irregularities in their tax affairs.

Full co-operation is required.

If irregularities are subsequently discovered the civil penalty will be significantly higher than that which would have been levied had a disclosure been made.

However, where materially false statements are made, false documents are provided with intent to deceive, or further concealments take place, then in the course of a civil investigation HMRC may switch to a criminal investigation with a view to prosecution of that conduct.

This is reserved for cases where HMRC needs to send a strong deterrent message, or where the conduct involved is such that only a criminal sanction is appropriate.

Under any enquiry HMRC will charge the full amount of tax, and interest on the late paid tax.

It is possible that the first indication of a criminal prosecution might be a knock at the front door during breakfast.

The premises will be searched and it is possible that the person under investigation could be arrested and taken for interview under caution by the police.

Such cases include:

• where the individual holds a position of trust or responsibility
• second offenders
• deliberate concealment and cases involving false or forged documents.