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The number of HMRC requests to professional services firms for confidential information on clients it suspects of tax crimes has risen by 19%. According to RPC 1,507 requests were made in 2016-17, compared with 1,276 in 2015-16.
Firms issued with a production order can struggle to balance the need to provide HMRC with the documents while at the same time ensuring they do not breach their duty of client confidentiality.
Firms can face criminal liability for failing to comply with a production order, but they also risk a legal claim from their clients if they provide too much information to HMRC.
Adam Craggs, partner at RPC, said: ‘HMRC is sending a clear message to those under investigation. While it is quick and easy to issue these orders, it is a huge burden on professional services firms. These investigations can cause serious business disruption to suspects and their advisers.’
