Especially in cases involving a large tax fraud sum, the accused and their tax consultant often only find out that criminal tax proceedings have been instituted when the tax fraud investigators arrive to search the accused’s home and business premises and, in most cases, the tax consultant’s office at the same time.
This situation causes a great deal of stress for the accused, their family and their staff, and it is not an everyday occurrence for the tax consultant and their employees either. It is thus important to conduct oneself in accordance with a few crucial guidelines, particularly as the course is quite often set during this phase of the proceedings and it cannot be rectified further down the line.
The basic principle of every search is:
Ask to see the search warrant
Make sure you ask to see the search and seizure warrant and request a copy.
The search warrant should state what the suspected criminal offence is and what the grounds for this suspicion are. With criminal cases related to tax law, this means that the type of tax, the relevant fiscal year and information on what the tax fraud involves should be stated.
Make sure that the investigators only search for those documents that are relevant to the offence specified in the search warrant.
While an appeal against the search can be lodged, this will not prevent the search from taking place.
Do not offer any opposition
Stopping a search that is already underway is virtually impossible. Trying to prevent it by claiming that the investigators are trespassing is futile. You will even run the risk of becoming liable to prosecution. Furthermore, in order to justify an arrest warrant, offering opposition to a search could be interpreted as the suppression of evidence.
Call your criminal tax defence lawyer
In this phase, this could also be your tax consultant. A good tax consultant knows when it is advisable to consult a qualified criminal tax defence lawyer. No one is permitted to deny you this call. Your defence lawyer will explain the situation to you and also clarify certain details about the search over the telephone with the officers who are carrying it out. If circumstances allow, your defence lawyer will attend the search immediately and give you legal advice.
Once the defence lawyer is at the scene of the search, they can identify which documents are permitted to be seized. For example, seizing defence documents, including those held by the accused, is not permitted. This is a fact that tax investigators and even investigating judges unfortunately sometimes overlook, even though the issue has long been settled by the supreme court. If the permissibility of the seizure is under dispute, the documents can be sealed.
Do not make a statement under any circumstances
Tax investigators exploit the fact that the accused is overawed by the search to persuade them to make a statement. They imply that “it’s not as bad as all that, it’ll get sorted out”.
If the tax investigators had thought that the matter was “not as bad as all that” they would not have made the effort to carry out the search. It is virtually inconceivable that the suspicion of a criminal offence can be dispelled by a statement made during the search. Without consulting a defence lawyer who is well-versed in criminal cases related to tax law, practically no one is able to correctly judge the consequences of their statement. During a search, which puts the accused under extreme psychological stress, this is all but impossible. If the criminal tax defence lawyer still views certain statements to be advisable after they have assessed them, they can be made later just as effectively.
If the accused makes a statement during the search, they make themselves vulnerable. The statement is not logged; the tax investigator subsequently writes it in a note and the accused does not have any bearing on the text.
Be careful if you are asked for information, i.e. during an apparently informal discussion. Every word that the accused, their family and their staff say to the tax investigators can be used in the criminal proceedings.
Do not release the consultant from the duty of confidentiality
Tax investigators regularly set out to encourage the accused to release the consultant from the duty of confidentiality by giving the impression that cooperation pays off. Being released from the duty of confidentiality can put the consultant in a difficult situation – every time they are questioned, they are defenceless against the questions of the investigating authorities and can no longer invoke their legally guaranteed witness privilege.
Inform staff about their rights and duties
All staff, especially those who work in the areas of accounting and bookkeeping, are potential witnesses. They can even be forced to make a statement. This does not apply if there is a risk that by making a statement they might incriminate themselves (accessory). The tax investigators often use the search to question witnesses at this early stage. However, staff are usually not aware that no one is obliged to make a statement to the tax investigation officers or to officers from the criminal investigation department. It can be refused without giving a reason (“I don’t want to comment...”). Furthermore, every witness has the right to be accompanied by a legal adviser while they are being questioned.
Exclude witnesses from the search
Ask every person who wants to take part in the search to show their ID and inform you of their role during the search. If witnesses are present (usually from the local authority), we advise you to exclude them from taking part. The involvement of these witnesses is for the sole purpose of protecting the taxpayer. The witness is to make sure that the search is performed in complete compliance with the law. However, to ensure the greatest possible discretion, the number of people taking part in the search is to be kept as low as possible. The representatives of the local authorities should therefore be explicitly sent away.
The following points must be borne in mind when the office of the accused’s tax consultant is searched:
Uphold the duty of confidentiality
Clients often follow the recommendation of the parties carrying out the search that the client should release the consultant from the duty of confidentiality. The consultant is then not even entitled to withhold a reference file. If the client has released the consultant from the duty of confidentiality, the consultant must call the client to make sure that the client revokes this release. This call can also be made in the presence of the investigating officers. The statutory duty of confidentiality then immediately comes into force once again. Even if the information provided by the tax consultant is restricted to the type of activities, scope and timeframe that they have been engaged for, this in itself could constitute a criminal offence and a violation of professional duties.
Never voluntarily release any documents
By voluntarily releasing documents, the consultant would be liable to prosecution. Releasing documents that are subject to consultants’ confidentiality obligations without the consent of the accused is prohibited. It should therefore be stated in the search record that the documents were not released voluntarily, even if this does not prevent the documents from being released.
Do not release the reference file
The tax consultant’s “reference file” is not subject to seizure. This includes all records that the tax consultant or their staff have created. Correspondence between the tax consultant and their client is also exempt from seizure.
The specific scope of the exemption from seizure is a contentious issue, especially in the context of accounting documents. In the event of a dispute, the consultant should petition for the documents that are to be seized to be sealed. The court can then clarify whether the seizure was legal or not.
The principle of not voluntarily releasing documents without the agreement of the client applies in this context too.
Seizing the reference file would only be legal if the tax consultant is accused of being complicit in a criminal offence carried out by the client. There must be specific grounds for this. The tax consultant should petition for the documents to be sealed.
All documents that have been handed over to the tax consultant for the purpose of preparing a voluntary disclosure are exempt from seizure, even if they are normal accounting documents that have been handed over specifically for the purpose of drawing up the voluntary disclosure.
Assert the right to make calls
The tax consultant has the right to make calls with their client as well as with the client’s criminal tax defence lawyer. Also, the tax consultant is permitted to make their own decision to call a criminal tax lawyer at any time in order to seek legal advice. The tax investigators do not have the fundamental right to demand to be present during the telephone call.
Ensure that a detailed inventory is made of the items seized
The content of all the documents should be identifiable from the inventories of the seized items. The inventory should be so detailed that, at any time afterwards, it is possible to determine which documents were seized.
If the volume allows, it is advisable to copy the documents that are to be seized. The tax investigators cannot prohibit this. Viewing the seized documents at a later date is also permitted.
An appeal can be lodged against a search of the premises of the accused or their tax consultant. An appeal is also permissible even after the search has been completed. Whether and on what grounds an appeal is to be lodged should be discussed with a criminal tax lawyer. Requesting an appeal can also be of disadvantage in relation to the litigation process.