Webinar report: Spotlight on dawn raids

You won’t want to be subject to a dawn raid – but having a plan in place will minimise the trauma.

7am Thursday. Your reception area is teeming with officials from a regulator. They’re branding a search warrant and demanding immediate access to the premises, including the IT server.

A similar scene is unfolding at the MD’s home. She’s being arrested and taken to her local police station for questioning.

The dawn raid was the subject of the first webinar in our new Legal Spotlight series. Guiding us through calm management of unannounced visits from officialdom were Michelle Sloane and Tom Jenkins, Partner and Of Counsel at RPC respectively.

The dawn raid in a nutshell

If an investigative body suspects your organisation or an individual within it of unlawful activity, it can get a search warrant and turn up out of the blue at multiple relevant premises. This usually happens in the early hours to maximise the element of surprise and minimise the likelihood of staff destroying evidence.

HMRC, the Serious Fraud Office, the Financial Conduct Authority, the police, the Health and Safety Executive and Competition and Markets Authority are just some of the bodies that conduct dawn raids. They have the power to:

• Enter premises (including homes of directors), land and vehicles – with reasonable force, if necessary;
• Examine and take copies of your books and other business records; and
• Require you to compile information not currently in recorded form.

Some regulators, such as HMRC have the power of arrest. They can ask the police to accompany them on dawn raids.

Preparing for a dawn raid

When a dawn raid begins, the first people to know about it are typically reception, security and IT teams. A comprehensive dawn raid policy, then, should provide training for these people on responding in the initial stages. It’s also essential to create a crisis management team and simulate a dawn raid as part of your readiness plan.

Once the raid is underway

When the officials arrive, don’t deny them entry. Instead, check and take copies of their ID, record their names and prepare visitor badges. The first available people in the crisis management and legal teams should be asked to attend as soon as possible. While awaiting their arrival, ask the regulators to wait in a designated room.

Inspect the search warrant in detail. Who issued it? What exactly does it empower the regulator to access? Can they return after they leave? You can challenge a search warrant by way of an application for judicial review of the decision by the relevant court. Reasons for making a challenge can include:

• The warrant being too broad in scope in relation to the material identified;
• The warrant being too broad in relation to the period it covers; and
• Relevant information not being disclosed to the issuing court.

Adopt a tone of cooperation with the regulators. Ask them to wait for your external lawyers to arrive before they start work. They’ll be thinking of the risk of documents being destroyed if asked to wait too long, but most regulators are reasonable on this point. If they refuse to wait, don’t obstruct them.

Shadow the regulators at all times so they’re not left to wander around unsupervised. While cooperating, staff must not volunteer additional information or documentation. Importantly, keep all conversations to a minimum while the raid is ongoing, only discussing administrative matters.

Any questions staff are asked beyond issues such as IT storage policy and office layout should be referred to the legal team. Brief the IT team to record what data was searched and accessed.

Remember, regulators and law enforcement agencies cannot access or seize materials subject to legal advice privilege or litigation privilege. This means the shadowing team should raise any concerns about the legally privileged nature of information. Any material that is clearly privileged should not be uplifted. If it is not clear if material is privileged or if files (including electronic files) contain a mix of privileged and non-privileged material, those records should be placed in sealed envelopes before they are seized so the privilege questions can be resolved subsequently.

If the raid extends beyond the first day, your premises – or parts of it – may be sealed. Ensure any seals remain unbroken and make nighttime workers such as cleaning and security teams aware of their importance. (In 2008, E.ON was fined €38m for breaking a seal during a 2006 antitrust dawn raid. Its claim that a cleaner was the unwitting culprit was dismissed.)

After the raid

Once the search is over, find out what’ll happen next. Are the officials coming back? Are any seals still in place? Next, debrief the legal, crisis management, shadow and IT teams to get a full picture of what was searched, accessed and removed. Prepare a detailed report and mark it “Privileged and confidential.”

Request a copy of the search warrant and consider if you can challenge it. And always agree a protocol with the regulator that covers:

• Legally privileged material;
• Excluded material; and
• Electronic material.

If the Managing Director is arrested

Under Section 24 of the Police and Criminal Evidence Act 1984, there must be reasonable grounds to believe it’s necessary to arrest someone. If an arrest looks likely, offering to attend a voluntary interview prior to the arrest may avert it.

The Managing Director will be interviewed under caution, most likely at a police station. It is important any arrested individual seeks legal advice before and during the interview.

Managing the media

Assume the media will catch wind of a dawn raid. Devise a media strategy and consider issuing a press statement – especially if the regulator makes an announcement of its own. Keep the media relations team small to avoid too many people giving conflicting information to journalists.

Download RPC’s Dawn Raid App

The RPC Dawn Raid App has you covered for every stage of an unexpected visit from a regulator. Use it for:

• Instant connection to specialist lawyers at RPC;
• Step-by-step interactive guidance on handling a dawn raid;
• Creating date and time-stamped task lists;
• Storing photos of documents;
• Accessing a resource library; and
• Much more.

The RPC Dawn Raid App is free and available at the Apple App Store and Google Play now.

Introducing RPC's Tax, Investigations and Financial Crime team

Michelle and Tom sit within the above team, offering pre-emptive advice on a wide range of tax risk issues and assisting clients with investigations and tax dispute resolution, including litigation before the tax tribunals and the superior courts. The team act for a broad range of clients, including large multinational corporations, SMEs and high-net-worth individuals.

Find out more: tax disputes flyer

RPC's specialist team also offers comprehensive support across all stages of criminal and regulatory investigations, combining deep expertise in criminal litigation with broad experience in complex, multi-jurisdictional financial crime matters. They provide strategic guidance and practical solutions to safeguard reputations, protect liberty, and achieve the best possible outcomes for their clients.

Find out more: financial crime brochure

Tax Take +

Tax Take + is RPC's award-winning free platform designed for accountants and tax advisers – a one-stop hub for the latest developments in the tax world affecting your practice. Staying up to date with developments in the tax and regulatory world is no easy task for accountants and tax advisers, with HMRC guidance and tribunal decisions to absorb and a myriad of deadlines to meet all while doing the day job of supporting clients.

Tax Take + provides all key upcoming dates and HMRC filing deadlines, tax and regulatory news, blogs and the latest podcasts, alongside a range of in-depth guidance notes.

Visit Tax Take +

Please do reach out to Michelle or Tom directly for all Dawn Raid queries, all areas mentioned above, or any other legal matters.

If you missed this session and would like the recording link, please contact us.

Join us again on 13 May

In our second event in this series the spotlight falls on the legislative position and recent cases affecting the management of employment. Register now.