Handing over your file to the authorities

What should you do if the police or HMRC tell you they are going to obtain a court order requiring you to hand over your file relating to a specific client? And, perhaps even more importantly, what should you NOT do?

(NOTE: This blog article is intended for accountants, bookkeepers, tax advisers and auditors in England and Wales.)

The relevant law

The police or HMRC (or other law enforcement authority) may seek a court order requiring you to hand over documents relevant to a criminal investigation. The ‘documents’ you are to be ordered to hand over may include the client’s records (if they are in your possession) and your own files relating to the client, including your notes of meetings with the client. The expression ‘documents’ here includes electronic files such as spreadsheets and recordings you hold of zoom calls, for example – so we are not just referring to paper documents.

The application may be made under s9 and Schedule 1 of the Police and Criminal Evidence Act 1984 (PACE), or s345 Proceeds of Crime Act 2002 (PoCA), or other legislation.

The court order, when it is made, may be referred to as a ‘production order’.

The court order can (and usually will) require you to hand over documents which would normally be subject to client confidentiality.

Typically the court order will list or otherwise identify the documents you are required to produce (for example, “Copies of all recorded correspondences with John Smith regarding his self-assessment income tax returns since 1 January 2020”) and give you a deadline to produce them (for example, within 7 days of the service of the court order on you).

It is important to remember that the service of a court order on you does not mean that you are being investigated or are suspected of having committed a criminal offence, it is your client who is the subject of the investigation.

Also this article is not dealing with requests for information and documents by your AML supervisory body as part of a check of your AML compliance – nor are we dealing in this article with requests from the Serious Fraud Office under s2 Criminal Justice Act 1987 where the SFO are investigating serious or complex fraud.

Do’s and Don’ts

Firstly, do wait until you have a copy of the court order (stamped by the court and signed by a judge) before you hand over anything. You do not necessarily have to be handed a paper copy of the court order – you may be served with it as a PDF attached to an email. You may be warned in advance that an application is being made for a court order – you may even be provided with a draft of the proposed order – but do wait until you have been provided with a copy of the actual order before you hand over anything.

If you are initially contacted by HMRC or the police saying that they are proposing to obtain a court order and outlining its terms then do be prepared to discuss with them what it is that they require (and what they do not require) and how the proposed wording of the order can be revised to make that clear. The authorities will not want to tell you too much about the nature of their investigation but it may be possible, for example, to limit the documents to a specific time period or to clarify whether you are required to produce your own working papers or just the information which the client supplied to you and the enquiries you made of the client.

Do seek legal advice, for example from a solicitor, if you are unsure of your legal position. This blog article is not a substitute for legal advice based on your own circumstances.

Do read the whole of the court order with great care. If, for example, it refers to documents at your premises it does not cover documents which were previously in your possession but which you no longer have (such as records which you examined and then returned to the client).

Do comply meticulously with the order and take care to provide everything which it requires of you.

Do NOT amend, revise, improve or finish off the completion of working papers, for example to make your files look better when they are examined by the police or HMRC. Do NOT backdate any documents or create additional documents for the purpose of disclosure to the authorities.

Do NOT destroy, dispose of, remove or conceal any documents referred to in the production order.

A production order does not oblige you to make a witness statement. If you are invited to make a witness statement I would recommend that you decline to do so. If you do make a witness statement you are in danger of breaching client confidentiality and you make it more likely that you will be called to give evidence in any criminal proceedings which get to court.

Do NOT attempt to explain or give a commentary on any of the documents. You are obliged to produce the documents – you are not obliged to explain or justify them.

Do NOT answer any oral questions about the client’s affairs from the police or HMRC in person or on the telephone. You are not obliged to do so, and you may breach client confidentiality if you provide oral information.

Do NOT provide documents beyond those specified in the production order.

Do NOT tell the client that you have been contacted by the police or HMRC or that you have received the production order. Do NOT ask the client for permission to supply documents or information to the police or HMRC.

Do NOT ask the client for any documents which you do not currently hold, and do NOT return to the client any documents which you do currently hold.

Do continue dealing with the client as normal.

If the documents requested under the production order would include information relating to the client’s physical or mental health then do seek legal advice before passing that information to HMRC or the police (as it is possible that your file includes medical records which should not be disclosed).

Do consider whether, having been contacted by the police or HMRC, you now have a suspicion of money laundering which should be reported to the firm’s MLRO or the NCA under s330 Proceeds of Crime Act 2002 and the Money Laundering Regulations 2017.

David Winch MLRO support services ltd