The majority of the cases taken up for investigation are cases submitted by tax officers, or discovered by Special Civil Investigations (SCI) during a visit to a tax officer, because there are prima facie indications of serious fraud.
There are a number of cases taken up which arise out of information given by informers, but the biggest other source of cases is ‘spin-offs’ from other investigations by SCI. Investigation of the working papers of dishonest advisers is another fruitful source of cases.
In the great majority of the cases arising out of tax office submissions, omissions from returns or accounts will already have been established. Nevertheless, before SCI holds its opening interview, the investigator will carry out extensive research to ensure that there is a strong case for a formal challenge and for proceeding with an investigation even in the face of a denial of irregularities by the taxpayer.
Because the investigation of serious fraud requires specialised skills and facilities not available in local officers, enquiry officers in tax officers are under strict instruction that as soon as serious fraud is suspected the case must be referred to SCI immediately. Officers in local tax offices are specifically instructed not to refer to mitigation for co-operation leading to a pecuniary settlement nor to issue leaflet IR 160: any mention of co-operation might prejudice the possibility of a criminal prosecution. Neither should they make any reference to a payment on account.