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Enforcement Action & Dawn Raids are on the increase….. are you prepared?

10 September 2019
In 2016/17, it was reported that the number of dawn raids carried out by HMRC had increased by 34% over the preceeding 5-year period.  This was a stark warning to all companies and was said to be as a result of HMRC's efforts to clamp down on white collar tax evasion, as well as the introduction of new legislation which criminalised the failure to prevent tax evasion and gave HMRC increased powers.

More recently, the Financial Conduct Authority has made clear its intention to proactively pursue enforcement cases and again we have seen an increase in activity.The FCA's Enforcement Annual Report supports this shift in attitude and reports that as of March 2018, the FCA had opened 504 enforcement investigations, up from 410 from the same point in 2017.

Whilst it is clear that only a small percentage (8% in 2017/18) of FCA cases resulted in public enforcement action been taken against organisations or individuals, this is nevertheless an increase on the previous year and is a clear statement of intent.  Increased enforcement action inevitably results in the greater use of dawn daids and the figures reveal that almost double the number of dawn raids were carried out by the FCA in 2017/18 than in the previous year.

The Competitions and Markets Authority has also increased the use of its investigatory powers and enforcement actions, and has used dawn raids as part of its investigations into organisations within financial services and other sectors.

Any company can be the subject of a dawn raid and it is a criminal offence to obstruct a lawful raid.  It is therefore essential that organsiations and their staff are prepared. An unannounced visit will create major disruption for a business and may result in protracted proceedings, fines or even arrests, as well as business interruption and reputational damage. At DWF, we believe that the best way to protect yourself and your organisation is to be prepared. We have an experienced team who have advised clients during dawn raids, can provide training to organisations on how to cope during and after a dawn raid and ensure that businesses are prepared for that unwanted knock at the door.  

If you would like further information, please contact sarah.smith@dwf.law or mark.thompson@dwf.law

Further Reading