Evan Wright represented nine company directors in the discontinuance of what HMRC described to the court at the time as their ‘largest investigation of the last five years’.

HMRC alleged that a group of children’s nurseries had overstated the number of employees in order to fraudulently obtain working tax credit and had over-claimed public funding in respect of children’s places at the nurseries over a number of years. HMRC alleged the directors were part of an organised crime group and had laundered the proceeds of their criminal activity through numerous bank accounts. The investigation was connected with dozens of DWP enquiries, civil tax investigations and various seizures of cash from suspects. OFSTED also investigated several nurseries as a result of the Revenue’s intervention. When HMRC applied for over thirty search warrants in the investigation, the officers referred the court to what they perceived to be evidence of criminal activity with an estimated loss to the Revenue of around £16 million.

Evan Wright became involved at the first round of interviews under caution. The legality of the search warrants was challenged in an application for judicial review. HMRC accepted the warrants were unlawful. This triggered a complex analysis of the seized material pursuant to section 59 Criminal Justice and Police Act 2001. Seven independent counsel were appointed to look at the documents. The exercise and the resulting court hearings took place over a period of eighteen months. Evan Wright represented the directors as interested parties and instructed Rupert Bowers of counsel in the proceedings. Some seized material was returned and HMRC were permitted to retain other material.

In parallel, the suspects were placed on police bail with conditions to report to a local police station on a weekly basis and surrender their passports. More than a dozen applications to the court over a period of years resulted in the relaxation or removal of conditions. HMRC stringently opposed any travel abroad, arguing that the suspects would not return to the UK. In some instances, suspects were permitted to travel outside the UK and returned. Eventually, HMRC agreed to remove the conditions altogether and passports were returned.

Evan Wright represented the suspects during several rounds of interviews under caution. They involved consideration of pre-interview disclosure and in some cases, preparing written representations for the interviews. It became clear that HMRC had appointed a ‘team of forensic accountants’ to look at the bank accounts and the businesses. After each round of interviews, Evan Wright prepared written argument on why the investigation should be discontinued. They contained submissions on why HMRC had misconstrued the evidence, how there was no fraudulent loss to the Revenue and argued that the investigation was based simply upon disruption. They submitted that civil investigations should be preferred and would be robustly answered. Over six years after the original arrests, HMRC closed the investigation and confirmed that none of the suspects were going to be charged with criminal offences.