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Two British policemen standing side by side AccountingWEB What to do when the police come knocking
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What to do when the police come knocking

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What do you do if there’s a police officer in reception asking for you? David Winch explains what an accountant should do if they’re faced with a production order from the authorities.

28th Nov 2023
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Accountants are not used to dealing with the police or the criminal justice system. So when the authorities come knocking on your practice door about a criminal investigation involving a client, it’s not surprising that the first thing an accountant does is to panic and wonder what they’ve done wrong. They then start thinking that they better talk to their client and ask them what on earth is going on. 

Before they know it, they’re like putty in the hands of authorities. David Winch (pictured below), the director of MLRO Support Ltd, said that is the wrong reaction. 

David Winch

His overarching message is simple: “We don’t need to panic.” He said that accountants have confidential financial information about their clients, and the authorities – whether that’s the police or HMRC – are not routinely permitted to just come and say “hand it over” because it’s covered by client confidentiality. So they need to go through a process to obtain this “special procedure material”. 

He explained that special procedure material means documents and information that is held by somebody in a business on the basis that they should keep it confidential. So in order for the authorities to access that information, they have to go through a process that involves getting a Crown Court judge to sign off that there is proper legal basis to allow them to require this information. As soon as the judge is satisfied of this, the production order is signed and served to the accountant.  

If you find yourself in this situation, Winch laid out a step-by-step process of how accountants should react if they get a knock on the door from the thin blue line. 

Step one: Don’t panic. 

“It’s not about you. It is about investigating the client, it’s not about investigating the accountant,” said Winch. “It’s not like somebody’s going to comment on how well you’ve done your work, or whether you should have checked more things or that sort of thing. That’s not the purpose, nor is it anything to do with anti-money laundering (AML) supervision. Please don’t start improving your working papers and initialling all the empty boxes and fudging things.

“It is to do with your client being suspected of having committed some sort of criminal offence, and you having information that will help the authorities to investigate.”

Step two: Don’t tell the client

“The whole point is that the authorities are investigating your client,” said Winch. 

“Your client may know that, or they may not know, but you can’t ask. So don’t contact the client and say, ‘I’ve had this production order request.’ You just deal with it. 

“You don’t want to be volunteering information to the client about the police or HMRC criminal investigation. The client may mention it to you or may not. But because of issues around tipping off, you don’t really want to mention it if you don’t have to. You just continue as normal – and don’t do anything extra.”

Step three: Narrow the information 

“Very often the authorities will contact you and say, ‘We are going to ask for a production order and we’re going to ask for this, this and this…’ At that stage, it is open for you to go back and ask them to be absolutely clear what you’re required to produce and what you’re not. 

“You may have had this client on your books for 20 years, and if they ask simply for everything relating to them, you’re going to have to root through 20 years’ worth of documents, whereas they probably only want the last year or two. 

“You could ask: ‘Are you only interested in its income tax returns? Are you interested in the limited company they have?’ You can actually make life a lot easier for yourself and for them by having a discussion about what it is exactly they need. 

“So if you can sort out with the authorities exactly what they want and focus the wording on that, then it will help you produce that information without too much time wasting, and they don’t have a truckload of information that they are not interested in. So you can actually cooperate with the authorities. 

“They will not want to tell you what they’ve got on the client, although they might say what offences they’re investigating – for example, child benefit fraud or drug trafficking. But they’re not going to give you all the details because they don’t know if they can trust you.” 

Step four: No obligation to give a witness statement

“The police or HMRC will probably ask if you would like to make a witness statement to confirm that you’ve handed over the documents. My advice is don’t do that. It’s an invitation – it’s not a requirement. 

“It’s better not to make a witness statement. HMRC or the police can make their own witness statements saying, ‘We attended the offices of XYZ Accountants and we obtained these documents,’ and list them. If you make the witness statement, it brings you into being a party in the proceedings and it makes you, in my view, more likely to be asked to be a witness in the Crown Court. 

“You just don’t need that hassle and stress. There’s absolutely no obligation on you to do it. So just don’t. The police or HMRC are not going to take offence if you say no. Certainly comply with the court order, but there is no obligation to make a witness statement.”

Step five: Don’t volunteer additional information

“Don’t feel that you should volunteer additional information, either. A production order is about what they call material, which means documents or recordings. It’s not about giving a commentary, offering advice or an explanation of what’s in the files. You just hand over the documents. You don’t need to comment on them or explain them. It’s down to them to sort out if they can understand them or not.”

Step six: Don’t be fooled by a data protection notice

“The police sometimes will give you a Data Protection Act notice. A Data Protection Act notice will say you won’t be in breach of the Data Protection Act if you give us information. 

“Remember that’s not actually a court order, requiring you to produce something. So the fact that you won’t breach the Data Protection Act really is neither here nor there. So don’t be fooled into thinking that the data protection notice forces your hand to turn over everything. At that stage, you would still be breaching client confidentiality if you turned over information. So you won’t breach data protection. What you have to say is, ‘I need a court order from you before I can hand you anything.’”  

Step seven: Do you have money laundering suspicion?

“Now you know HMRC or the police are conducting a criminal investigation into your client, do you need to report a suspicion of money laundering under the normal anti-money laundering rules? 

“The answer in all probability is yes. If you make that report, say that a criminal investigation is ongoing and include the reference number if you have it. But as ever with suspicious activity reports, you don’t want to do tipping off. 

“You are now in a bit of a dilemma. If you’re aware the police are suspecting your client of drug trafficking, for example, then will you want to continue acting for this client? 

“There’s a tension between not wanting to tip off and certainly not wanting to give information about having a production order vs if this client is possibly involved in criminal activity that they’re not telling you about. Do you want to carry on with them? 

“There isn’t a standard textbook answer to that. It depends on the particular circumstances.”

Replies (22)

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By johnjenkins
28th Nov 2023 09:52

David you nip out of the back door, have an early lunch (perhaps liquid) then wait until they have gone before shredding all the records. (yes this is posted tongue in cheek).

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the sea otter
By memyself-eye
28th Nov 2023 10:10

You only need to worry is you have either a football manager or a footballer on your books

Oh, and someone investing in central London property.

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Replying to memyself-eye:
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By johnjenkins
28th Nov 2023 10:38

Oh and a politician.

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By mkowl
28th Nov 2023 10:46

Put my burner phone down the loo

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By raybackler
28th Nov 2023 10:48

Great article David. Loved most of the tongue in cheek replies too!

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7om
By Tom 7000
28th Nov 2023 11:20

I think my reaction at the time was.... hes got what?... why didnt he tell me.....

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By FactChecker
28th Nov 2023 11:51

“Don’t feel that you should volunteer additional information ..”
and yet
“You could ask: ‘Are you only interested in its income tax returns? Are you interested in the limited company they have?’”

Isn't that volunteering that they have a limited company (which might not have been known to the inquisitors previously)?

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Replying to FactChecker:
David Winch
By David Winch
28th Nov 2023 12:17

Yes, fair point. What I was trying to say was have a friendly chat with the police/HMRC and try to find out more about what they want / don't need.
In many cases what they want will be evidence that your client lied to you or omitted to give you important information / documents. They will often be looking for evidence of dishonesty on the part of the client.
So if your file includes a note, "Client says total sales were £50,000 for the year ended X" and they know from other evidence that sales were £100,000 for that year then that is useful evidence.
David

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Replying to davidwinch:
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By Postingcomments
28th Nov 2023 12:27

Have a friendly chat? Absolutely not. If you have the law breathing down your neck, you need to shut up and lawyer up, not run your mouth.

Give them whatever you legally have to do so but only if given the correct paperwork. Record everything. Maybe the police aren't after you initially, but they could start to investigate you if they think you have done something wrong. Or the client could sue if you have handed over documents that you didn't have to.

Of course, the starting point is don't work with any client you have a bad feeling about. I have avoided all sorts of headaches with this rule. I don't even have clients who run up their DLA then moan about the tax.

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Replying to Postingcomments:
David Winch
By David Winch
28th Nov 2023 13:25

Postingcomments wrote:

Have a friendly chat? Absolutely not. If you have the law breathing down your neck, you need to shut up and lawyer up, not run your mouth.


If you are invited to explain what you did - particularly if you are invited to attend a police station for an interview - then by all means have a solicitor by your side and take legal advice before you say anything.
But there is a world of difference between that situation and one in which the police/HMRC inform you that they are going to ask you to supply documents in relation to a criminal investigation of a client.
David
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Replying to davidwinch:
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By Postingcomments
28th Nov 2023 14:37

The police gathering evidence is exactly that. The fact that you have some connection to said evidence and what they are (initially) looking at means that there is a risk that said investigation could expand to include you.

At no point should an accountant assume that they will not (rightly or wrongly) become a person under investigation. To think so or to act on such a basis is an extremely naive view to take.

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By Ian McTernan CTA
28th Nov 2023 12:30

I wonder what the client will say when you send him a bill for all that extra time with no explanation....

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By ireallyshouldknowthisbut
28th Nov 2023 13:52

I once had the police knock on my door when I lived in a terraced house. 4 of them. Apparently I didn't match the description, and they declined to check the house. I then went out the back to the kitchen to get a cup of tea, and another 4 in the garden. They must have boosted over the fence as the rear gate had a Yale lock on it.

Put the wind up me no end.

Goodness knows who they were after with 8 burly coppers on hand.

Nearest I have had in professional practice is being doorstepped by what was then Customs about a used car dealer. I invited them in for a cup of tea and couldn't tell them much. I resigned shortly after, and kept away from anyone with a car/van/cash/shop ever since.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
28th Nov 2023 14:58

I had a couple of coppers come to my office once (only once unfortunately).

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By JRX
28th Nov 2023 14:17

''What do you do if there’s a police officer in reception asking for you?''
Sign them up as a client!
Yes this happened to me. Turned out the policeman wanted my professional help. When we sat down for a discussion he admitted that he had a buy to let property and had not told HMRC. So we promply signed up to the let property campaign and disclosed the 5 years of extra income.

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Routemaster image
By tom123
28th Nov 2023 15:52

Closest I've come is when bailifs turned up on my second day in a job wanting a walk in possession of a piece of machinery.

It was July, and the (6'6'") guy was wearing a big black overcoat.

I think we found the money to pay that debt fairly soon.

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Replying to tom123:
By Democratus
08th Dec 2023 10:12

In a former role It turned out our MD had bought machines on HP ( I knew about that), also arranged a sales and leaseback on those same machines ( no idea where that money went) and as a final act had those same machines covered by a garnishee order for HMRC for some other debt. All came out as the whole group failed.
Valuable CPD lesson there for me at least.

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Replying to Democratus:
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By johnjenkins
08th Dec 2023 15:12

Shades of Del boy.

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By Calculatorboy
29th Nov 2023 11:43

It's pretty simple , if police turn up requesting client documents , you need client authority or a warrant .

Obviously contact client for instructions & for him to seek legal advice , ie whether he wants to release documents voluntarily or not

Remember to check any warrant thoroughly before releasing documents. The Police will wait for you to do that. I made them a coffee.

Why send SAR if you have no suspicion from your dealings with the records ?
Remember the police go on fishing expeditions all the time . The fact they are investigating doesn't mean client will be convicted of a crime.

Don't volunteer to be a witness , you need to be subpoenaed.

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Replying to Calculatorboy:
Stepurhan
By stepurhan
29th Nov 2023 12:33

Calculatorboy wrote:

Obviously contact client for instructions & for him to seek legal advice , ie whether he wants to release documents voluntarily or not

Avoiding an accusation of tipping off by doing so, how?
Quote:

Why send SAR if you have no suspicion from your dealings with the records ?
Remember the police go on fishing expeditions all the time . The fact they are investigating doesn't mean client will be convicted of a crime.


Submitting an SAR does not mean they have committed a crime. It means you think there is a possibility they have committed a crime.

The police may well go on fishing expeditions, but I doubt they act entirely at random in doing so. It does not seem unreasonable to submit an SAR in the circumstances. If the police are already investigating, it is hardly going to make a difference to the client is it.

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Replying to stepurhan:
David Winch
By David Winch
29th Nov 2023 12:42

stepurhan wrote:

Calculatorboy wrote:

Obviously contact client for instructions & for him to seek legal advice , ie whether he wants to release documents voluntarily or not

Avoiding an accusation of tipping off by doing so, how?


Have a look at s333A(3) and s342 Proceeds of Crime Act 2002. If you are considering contacting the client about this be very sure to get your own legal advice before doing so.
David
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Replying to davidwinch:
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By Calculatorboy
29th Nov 2023 16:14

I do now recall in my case the police asked me not to notify client of the initial meeting which I obviously complied with. Client was due to return to uk and had telephoned me beforehand oblivious to his impending arrest on arrival (he was later acquitted of the charges). I also thought there was a good chance my telephone was being tapped , so tread very carefully

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