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Resident and Negligent

August 21st, 2014

The First Tier Tribunal decided earlier this year that the taxpayer, a merchant banker named Paul Daniel, was UK Resident for tax purposes, despite his move to Brussels in 1999.  They also decided that his claim was made “negligently”: allowing HMRC to issue an extended time limit assessment for 1999/2000 – on a Capital Gain of £20million.

The FTT described this as “a hard-fought residence appeal.” The Tax Tribunal said the burden of proof was on Her Majesty’s Revenue & Customs to show that Mr Daniels was negligent.  If he was, then the burden of proof was on Mr Daniels to show that he had indeed become Non-Resident in the UK.  The judges stated that “if the claim is plainly honest, and also tenable (even though borderline) there should be no risk of negligence being established”.

HMRC challenged his Tax Residence status on the basis that he was not employed full-time abroad: partly as he had performed “substantive duties” of “particular significance” in the UK.

In this case the Tribunal was particularly troubled by the fact that the appellant’s claims were not backed up with sufficient evidence.  The judges noted that “his evidence was not backed up by a single written document of any sort (fax, email, records of phone call, any sort of timesheets or any copy of any presentation made to any potential customer)”.  They went on to say that “much depends on the credibility of the appellant’s evidence”.  In reaching their judgement that he had not left the UK to work full-time abroad, and that he had been negligent in claiming to do so, the Tribunal clearly had grave doubts about the accuracy of his evidence.  For instance, they decided that his contention regarding the amount of work he did outside the UK was “untenable” and they stated that “he has certainly not helped his case by providing no documentation whatsoever”
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What does this mean for me?
This case (TC03312) demonstrates the point that in any tax assessment appeal hearing before the independent Tax Tribunal it is crucial to gather all the available evidence, and to present this clearly to the Tribunal.  Also, any evidence which is going to be given by way of testimony from the appellant needs to be rigorously tested in advance, so that it can be put clearly, accurately and tenably to the judges during the hearing.  Although there were a few technical tax issues at stake, ultimately this case was lost on the basis of the facts – or lack of them.  Facts and evidence do not emerge by themselves.  They have to be presented by the appellant and his advisers to the Tribunal at the hearing.  If you have a contentious tax appeal – whether it’s regarding tax residence or otherwise – it is crucial that your team provides as much evidence as possible, fully and effectively, at the Tribunal hearing.

How can Lynam Tax Appeal Experts Help Me?
Lynam Tax Appeal Experts have prepared for many Tribunal hearings and the process has usually meant HMRC conceding before the formal meeting.  We have also presented many cases successfully at formal contentious hearings, and we are currently assisting a number of clients through the Alternative Dispute Resolution; Internal Review; and Tribunal processes. We will fight your corner tenaciously, but also with the subtlety and skill honed from nearly 70 years’ combined real experience.

*If you need help with a difficult tax dispute or a contentious tax appeal call now for a confidential and no obligation discussion:

Paul Lynam:  0845 643 9997
Andrew Nutbrown:  07718 778710

Unfair VAT “Late Payment Surcharge” Dismissed

August 19th, 2014

In a case heard earlier this year (TC 3490), the independent Tax Tribunal quashed an HMRC VAT Late Payment Surcharge made on Trinity Mirror plc of £70,000: reducing it to nil, on the basis that it was “plainly unfair”.

The company had an excellent compliance record since registering for VAT in 1986.  However, in 2007 it was twice late in paying its VAT over.  HMRC issued a Late Payment Default Surcharge of £70,000 in respect of the 2nd late payment.  The taxpayer appealed on the basis that the penalty amount was “plainly unfair”.  The First Tier Tribunal decided that the penalty was “disproportionate”: using European Human Rights Court jurisprudence.  As this particular penalty legislation did not have any terms which allowed for the penalty to be reduced, the Tax Tribunal judges could either uphold the penalty or quash it entirely.  In this case, as the penalty was not proportionate to the offence the Tribunal decided not to uphold it.  Therefore, they had no alternative but to reduce it to nil.

What does this mean for me?
This case illustrates how aggressive HMRC can be in charging penalties.  Most of the tax geared penalty legislation has provision for the penalties to be reduced: known as abatement or mitigation.  However, HMRC had clearly decided to maximise the amount they collected by not incorporating any mitigation clauses in this legislation.  On this particular occasion the taxmen’s rapacity got the better of them, and it backfired.  Whatever it says, the legislation still has to comply with the Human Rights Act, which effectively provides that any penalties have to be proportionate to the offence.  Of course HMRC could have chosen not to charge a penalty on this occasion.  But instead the tax inspectors took an inappropriately aggressive stance, and tried to charge the maximum amount possible.  This case once again illustrates how useful the Tax Tribunal can be in considering contentious matters.  If you have a point where you can’t agree with HMRC, then the independent Tribunal may well be the forum to gain satisfaction.

Do I need specialist help with my tax appeal?
The taxman uses specialist ‘Appeals’ teams to lead its cases at Tribunal.  Lynam Tax Dispute Experts have decades of experience in handling contentious tax appeals, and can assist taxpayers and their accountants with the process; in order to achieve the optimum results.

*If you need help with a difficult tax dispute or a contentious tax appeal call now for a confidential and no obligation discussion:

Paul Lynam:  0845 643 9997
Andrew Nutbrown:  07718 778710

Non-Dom’s Loan Collateral Concession Axed

August 7th, 2014

Non-Domiciliaries will no longer be able to benefit from a Remittance Basis concession that allowed them to use unremitted foreign income or gains as collateral for commercial loan arrangements enjoyed in the UK without incurring a tax charge.

Up to now HMRC had accepted that Remittance Basis taxpayers, who obtained a loan secured using foreign income or gains that remains overseas, and remitted part or whole of that loan to the UK, could potentially have been taxed twice on the amount of loan brought to the UK.  So, in 2010 the taxman issued a concession whereby loans made on commercial terms, that were regularly serviced from foreign income or gains, would be taxed only on the servicing payments; and not on the use of the underlying collateral.

However, now HMRC says it “is seeing large numbers of arrangements which are not considered to be commercial and not within the intended scope of the concession”, and so have withdrawn the concession forthwith, from today.

However, there is some relief for arrangements set up before today.  Affected taxpayers have to notify HMRC where they have used foreign income or gains as collateral for a loan – and have not reported a remittance. HMRC won’t tax those remittances if the loan arrangements were within the terms of the concession if, by the end of this year, the taxpayer makes and fulfils a written pledge that the foreign income or gains security either has been, or will be replaced by non-foreign income or gains security before 5 April 2016; or the loan or part of the loan that was remitted to the UK either has been, or will be repaid before 5 April 2016.

What does this mean for me?
It will only affect you if you are UK Resident who is Non-Domiciled in the UK and pays the Remittance Basis Charge.  However, for any Non-Resident or Non-Dom it once again illustrates the extreme complexity of the post-2008 legislation.

How can Lynam Tax Experts help?
Lynam Tax Experts have helped many Non-Domiciled individuals save large sums, by careful analysis of their affairs and the correct application of complex legal principles: which a large number of tax inspectors seem to misunderstand.  Dealing with a Tax Residence enquiry or a domicile or remittance disclosure requires specialist knowledge, deep experience and a proven methodology.

If you need more information about this complex issue then phone today for a free, confidential, no obligation discussion.  Call:

Paul Lynam : 0845 643 9997 or

Andrew Nutbrown : 0771 877 8710

Offshore Tax Info Leaks Keep Coming

August 5th, 2014

Once again, what was thought to be confidential information about assets held offshore have now been stolen and then leaked.  The latest victims are the clients of Kleinwort Benson Asset Management in Jersey.  The beneficiaries are likely to be UK tax inspectors!

Last year, HM Revenue & Customs announced the Jersey Disclosure Facility: an opportunity for people with undeclared tax liabilities and links to the Channel Island, to come forward and settle their affairs on favourable terms: prior to the Jersey authorities passing information of bank accounts and other assets to the UK taxman.  Early disclosure has now become more imperative for UK residents who are customers of the Jersey branch of the famous wealth management firm Kleinwort Benson.

The UK taxman is getting increasingly massive amounts of information about assets held outside the UK by continuously increasing the large number of Tax Exchange Information Agreements it has with other countries.  But another major source of important information is coming from the large amount of data being passed on to journalists, politicians and international tax authorities by people who have stolen what was previously thought to be confidential information held by various financial institutions.

An American pressure group, calling itself the “International Consortium of Investigative Journalists” has obtained records of more than 20,000 people relating to dealings with Kleinwort Benson in Jersey.  They have passed the information on to The Guardian newspaper, who have begun to publish the details.  The published details so far include various celebrities, judges, sports stars, business tycoons, and aristocrats.

What does this mean for me?
If you have an offshore bank account it is clear that the net is closing in.  HMRC tax investigators are currently trawling through information regarding British residents with bank accounts in Switzerland; Jersey, Guernsey, and The Isle of Man.  HMRC has also obtained information about thousands of people with other offshore accounts in various jurisdictions.

Senior tax officials are busy negotiating further exchange agreements with other so-called tax havens.  The banks themselves are coming under increasing pressure from governments worldwide to make further disclosures regarding offshore bank accounts held.

If you have an offshore bank account and need to regularise your tax position it is essential that you act urgently.  There are various offshore disclosure facilities which can be utilised in order to avert criminal prosecution and also reduce penalties.  The Liechtenstein Disclosure Facility can still be used to obtain extremely favourable terms: even for people who had no previous link to the principality.

Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues.  We are helping many clients and their agents with the current tax amnesties.

*For a free, private and no obligation consultation don’t delay, call:

Paul Lynam: 0845 643 9997

Andrew Nutbrown: 0771 877 8710

Jail Holiday for Newport Tax Cheats

August 3rd, 2014

A father and son business partnership from Newport were both sentenced to three months for their tax evasion; meaning that they’ll actually serve about 6 weeks: the length of the school summer holidays!

Mohammed Sabir (aged 57) and his son Razwan Sabir (aged 30) defrauded HM Revenue and Customs of £65,000 over a 6 year period. The Sabirs were not declaring their earnings from a minimarket business (the Baneswell Express store) for VAT purposes.  And Mohammed Sabir did not declare the rent he received for 3 properties he had purchased between 2001 and 2008. The Assistant Director, Criminal Investigation HMRC, said:  “Sabir built up a portfolio of properties with no obvious means of funding the purchases. In addition he was operating his mini-market business without paying the taxes…”

Mohammed Sabir admitted failing to pay Income Tax and National Insurance totalling £30,645.  Razwan Sabir admitted failing to register the business for VAT and failing to pay £23,666 in VAT. He also admitted failing to pay Income Tax and National Insurance totalling £10,686. They were both sentenced to 13 weeks in prison and 13 weeks on licence at Cardiff Crown Court 1 August 2014.

They will each actually serve approximately one day in prison for every £1,000 they defrauded!

How Could Lynam Tax Enquiry Experts Help Me?
Lynam Tax Enquiry Experts have a vast amount of practical experience in managing serious tax fraud investigations.  If you are worried about a tax enquiry we can advise you on the best course of action.  If appropriate, we can help you manage any necessary disclosures.  If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.

*For a free, private, no obligation consultation, call

Paul Lynam: 0845 643 9997

Andrew Nutbrown: 07718 778710

Changes to COP9 from 1 July 2014

July 29th, 2014

From 1 July 2014 HMRC’s Code Of Practice 9 (“HM Revenue & Customs investigations where we suspect tax fraud”); has been amended to take out the so-called “Cooperative Denial” option, and also to clarify that the behaviour which they expect to be disclosed falls into the “Deliberate” category; for both penalties and assessing time limit purposes.

HMRC’s Code Of Practice 9 is issued in cases where the taxman decides to investigate suspected tax evasion using civil, rather than criminal, powers.  Taxpayers are then offered the opportunity to take part in the Contractual Disclosure Facility (CDF).  Prior to 1 July 2014 the opening letter of a COP9 case offered a taxpayer three options.  One of these was to notify HMRC that they accepted that their behaviour amounted to tax fraud, and that they were going to make a full disclosure.  A second option was that the taxpayer stated that they were denying any tax fraud and were refusing to cooperate.  The third option allowed the taxpayer to say that they did not admit having committed tax fraud, but wished to cooperate with HMRC.  That third option was known as the “Cooperative Denial Route”.  HMRC claim that option created uncertainty and confusion in the minds of recipients of COP 9, and they have therefore now withdrawn the Cooperative Denial Route option, as of 1 July 2014.

HMRC have also taken the opportunity to modernise some key terms and bring them into line with recent legislation.  Whilst the CDF is still only offered to taxpayers where HMRC suspect tax fraud, the taxman has reduced the use of the term “fraud” in COP9, as that is redolent of criminal cases.   As Code Of Practice 9 is intended to lead to a civil settlement (i.e. the payment of tax, interest and tax-geared penalties) rather than a prosecution, HMRC have now clarified that the behaviour which needs to be disclosed relates to errors in tax returns which were brought about by “Deliberate” behaviour.  Deliberate behaviour, along with “Deliberate behaviour with concealment” leads to the highest penalty charges available to HMRC: e.g. up to 200% of the underpaid tax where certain offshore bank accounts are held.  Establishing Deliberate behaviour also allows HMRC to collect tax for the previous 20 years.   However, HMRC still reserve the right to prosecute in cases of incomplete COP 9 disclosures – in which case they would be reasserting that the behaviour related to tax fraud.

Overall, these do not amount to any fundamental changes to the Contractual Disclosure Facility process.  However, it does remove one opportunity to enter into discussions with HMRC rather than choosing one of the two more black and white options of an outright denial or a complete disclosure.  It has therefore become all the more important for taxpayers to make the right decision within the crucial 60 day window of receiving a CDF offer from HMRC.  In order to do so HMRC’s policy lead for civil investigation of fraud advises.  “If a client receives an offer of CDF and the adviser is not familiar with the COP9 process, HMRC suggests that advice is sought from an agent who specialises in this area.”

What does this mean for me?
If you receive a Contractual Disclosure Facility HMRC’s Code Of Practice 9 (“HM Revenue & Customs investigations where we suspect tax fraud”) it means that HMRC believe they have very strong evidence that you have committed a prosecutable tax fraud.  Nevertheless, they are giving you the opportunity to avoid prosecution by making a full disclosure.  You have got 60 days to decide whether you want to cooperate with the CDF process.  If you do not cooperate and HMRC subsequently prove that you have committed tax fraud, then they are very likely to prosecute you.  That can lead to a prison sentence and also to the confiscation of your assets, along with publication of your details.  It is therefore crucial that you obtain specialist advice immediately on receipt of a COP9.

How can Lynam Tax Fraud Investigation Experts help me?

Lynam Tax Enquiry Experts have vast experience of successfully dealing with COP9 investigations and CDF cases; relieving their clients’ stress and negotiating optimum outcomes. We can help you save tax, interest and penalties.  We can save you years of stress, worry and disruption.  And we can help you avoid a criminal investigation.
Nb. If you, or your client, have received an HMRC Code of Practice 9 you need specialist help now.  Do not delay.

For a free and totally confidential discussion: Call Now:

Paul Lynam : 0845 643 9997

Andrew Nutbrown : 0771 877 8710

Taxman Boasts High Net Worth Unit Tax Boost

July 17th, 2014

HM Revenue and Customs were today crowing about the high and increasing yield it is getting from its specialist High Net Worth Unit, which was set up in 2009 to deal with the tax affairs of the 6,200 wealthiest UK individuals:

Since its inception the HNWU has netted the exchequer £1 billion in compliance yield (that is tax, interest and penalties).

The compliance figures were revealed by the Financial Secretary to the Treasury, who warned: “HMRC vigorously polices the rules ensuring it collects the tax that is due, and takes tough action against the minority who seek to avoid their responsibilities.”

The year-on-year increase in yield by the High Net Worth Unit is: 2009/10: £85 million; 2010/11: £162 million; 2011/12: £200 million; 2012/13: £222 million; 2013/14: £268 million.

What does this mean for me?
If your affairs are dealt with by the HNWU, and you get a tax enquiry from HMRC, then you know that you are being dealt with by specialist investigators who are targeted with bringing in large sums of extra money from you.

How can Lynam Tax Enquiry Experts help me?
The High Net Worth Unit is staffed by specialists.  You need specialist help on your side too.  Indeed many accountants prefer to outsource the tax enquiry work to specialists such as us.  Lynam Tax Enquiry Experts have over 70 years full-time experience of handling HMRC tax enquiries. We have huge experience of dealing with high net-worth individuals’ tax issues; and can be relied upon for integrity and discretion.

If you or your clients are facing a compliance check from the HMRC HNWU please call today – for a free and wholly confidential, no obligation discussion.

Paul Lynam: 0845 643 9997
or Andrew Nutbrown: 0771 877 8710

Prison for VAT fiddling Accountant

June 19th, 2014

A West Country accountant was imprisoned this week after pleading guilty to a £95,000 tax fraud: in relation to his hands-free megaphone business.

Robert Leonard Carpenter, aged 64 from Barnstaple in Devon and who traded as “Accountancy Services”, invented a hands-free megaphone – setting up Voicethrower Ltd to market the product.  HMRC checked his VAT repayment claims (which from 2007 – 2012 totalled £95,030); asking for the invoices.  At first he told the taxman that some of them had been accidentally destroyed.  However, he admitted later that a lot of his costs were bogus.

Carpenter was charged with 2 counts of fraud.  He was sentenced this week to a year in jail, and was disqualified from being a Company Director for 6 years.

His Honour Judge Gilbert QC, said: “The fact you are an accountant is a serious aggravating feature.”

How Could Lynam Tax Enquiry Experts Help Me?
Lynam Tax Enquiry Experts have a vast amount of practical experience in managing serious tax fraud investigations.  If you are worried about a tax enquiry we can advise you on the best course of action.  If appropriate, we can help you manage any necessary disclosures.  If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.

*For a free, private, no obligation consultation, call

Paul Lynam: 0845 643 9997

Andrew Nutbrown: 07718 778710

VAT Late Filing Penalty Waived: as “Disproportionate”

June 17th, 2014

The First Tier Tribunal (Tax) completely discharged a VAT late filing penalty (aka “Default Surcharge”) of £70,000, which HMRC had charged the Trinity Mirror newspaper group for the late filing of two VAT returns, both of which were only one day late.

Trinity group had an unblemished VAT compliance record.  But within the space of 1 year it filed 2 VAT returns late: albeit only 1 day late in respect of each.  HM Revenue and Customs, in its wisdom, decided that a ”fair” VAT Default Surcharge penalty would be one which was effectively charged at £24 for each minute the returns were late!  The total penalty they attempted to impose was £70,909: even after they had reconsidered the matter internally.  Unsurprisingly, Trinity Mirror appealed to The First Tier Tribunal (Tax).

All parties agreed that the legislation did not allow the Tax Tribunal to simply reduce the penalty.  The independent body could either uphold the penalty in full or completely discharge it.  In a verdict published this April, the Tribunal judges decided that “a penalty must not be disproportionate to the gravity of the infringement” (i.e. filing 2 days late).  In this particular case they felt that by charging such a large penalty – relating to a 1 day default – the taxman’s behaviour was “plainly unfair”, and that the penalty imposed was too “harsh”.  The intention of the legislation is that “different breaches warrant different penalties and the gravity of the infringement is relevant.  The gravity here is low, but the penalty is high.” As the Default Surcharges were disproportionate in relation to the offence of filing late (rather than to the amount of VAT involved), and they went beyond what was “strictly necessary for the objectives pursued”, the judges decided the penalties were excessive.  Therefore, the Tribunal could not uphold the penalties.  In the circumstances of the legislation they had no alternative but to completely discharge the penalties, i.e. reducing them to nil.

What does this mean for me?
If you are currently in a dispute with HMRC, you may find them very insistent about the application of the law: as they interpret it!  HMRC may say that a senior tax inspector looked at the case, or that the issue has been considered by their technical specialists.  It may even be that you have been unsuccessful by way of a Statutory Review.  What this case proves yet again is that the Tax Tribunal takes a strictly impartial approach to the interpretation of the legislation.  HMRC inspectors often “threaten” to take appeal cases to the Tribunal.  In fact, the Tribunal is as much a shield for the taxpayer, as it is a sword for the taxman.

Do I need specialist help with my tax appeal?
The taxman uses specialist ‘Appeals’ teams to lead its cases at Tribunal.  Lynam Tax Dispute Experts have decades of experience in handling contentious tax appeals, and can assist taxpayers and their accountants with the process; in order to achieve the optimum results.
*If you need help with a difficult tax dispute or a contentious tax appeal call now for a confidential and no obligation discussion:

Paul Lynam:  0845 643 9997

Andrew Nutbrown:  07718 778710

“Bodging builder” builder banged-up

June 16th, 2014

Self-employed builder Carl Williams, aged 43, from Shirley, West Midlands has been dubbed the “bodging builder” by HM Revenue & Customs, and sentenced to 16 months in prison for his tax fraud.

Trading under the names of CA Williams and CJW Builders, between 2007 and 2011 Williams fraudulently under-declared his earnings and over-declared his purchases in his tax returns: claiming more than £52,000 in VAT repayments.  When HMRC questioned the tax returns in 2011 he gave the taxman false paperwork (using the names of 5 bogus companies) and claimed another £44,000 in VAT repayments.

HM Revenue & Customs alleged that some the customers they interviewed complained of extremely shoddy workmanship and of jobs he simply left unfinished.

Williams admitted 6 counts of VAT fraud and (unluckily for him) was sentenced on Friday 13 June at Birmingham Crown Court.

How Could Lynam Tax Enquiry Experts Help Me?
Lynam Tax Enquiry Experts have a vast amount of practical experience in managing serious tax fraud investigations.  If you are worried about a tax enquiry we can advise you on the best course of action.  If appropriate, we can help you manage any necessary disclosures.  If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.

*For a free, private, no obligation consultation, call

Paul Lynam: 0845 643 9997

Andrew Nutbrown: 07718 778710

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