Six employees of Revenue & Customs are being investigated over their role in a £100m VAT fraud trial that collapsed, with a High Court judge accusing the prosecution of “muddle, incompetence and lack of frankness”.

The investigation is the first inquiry to be carried out into the newly merged organisation by the Independent Police Complaints Commission, which has broadened its remit to look at Revenue & Customs as well as police departments.

Amerdeep Somal, the IPCC commissioner, said the inquiry she was overseeing was studying the actions of Customs officers and staff – among them investigators and a lawyer – criticised by Mr Justice Crane, the trial judge. He said Customs officers had withheld evidence from defence lawyers and even their own barrister, which showed some witnesses could not be relied on to tell the truth.

The collapse of the trial, one of Customs’ costliest prosecution failures, led to the exoneration of five Manchester-based businessmen accused of a complex tax scam in the cross-border trading of mobile phones.

The five were accused of importing mobiles tax free via a false trading company, which vanished without paying VAT. The phones were sold on, with VAT added, through “buffer” companies.

The IPCC inquiry, likely to last several months, involves a team of eight led by a retired senior Customs officer and including specialist investigators from the public and private sectors.

John Wadham, IPCC deputy chairman, denied any potential conflict of interest. The team had been picked because of a commitment to the value of “seeking truth on the basis of evidence”.