The globally concerted huge push by leading nations to detect and deter tax evasion through “offshore banks” has apparently failed, according to an analysis of banking industry data; reports Simon Bowers in the Guardian today.

Despite lofty rhetoric from the politicos (e.g. the OECD claimed: “The era of bank secrecy is over…It is now no longer possible to hide assets or income without risking detection.”); a tsunami of Tax Information Exchange Agreements (TIEAs) with “tax haven” countries; and various Tax Amnesty initiatives (e.g. the Liechtenstein Disclosure Facility and the Swiss Tax Agreement), the Bank of International Settlements (BIS) data shows bank accounts in tax havens still held US$2.7tn (£1.7tn) in 2011 – about the same amount as in 2007.

The academics who were given access to the BIS data, Niels Johannesen and Gabriel Zucman, concluded: “The G20 tax haven crackdown has … largely failed … Treaties have led to a modest relocation of bank deposits between tax havens but have not triggered significant flows of funds out of tax havens.”

Johannesen and Zucman’s study also pointed to the use of various structures spanning multiple tax havens. They say that US$550bn (i.e. about 25% of all bank deposits in tax havens) are owned by individuals or companies apparently situated in other tax havens. The British Virgin Islands (BVI) and Panama are the most popular jurisdictions for holding companies and other ownership structures; such as Foundations and Trusts.

The academics say the TIEAs lead to a 3.8% fall in the deposits held on behalf of individuals or companies from the treaty partner. But this money seems to simply move to jurisdictions that do not have the bi-lateral treaties! For example, Jersey signed 18 such treaties. Banking deposits in Jersey dropped by more than 50% ( $110bn) over 4 years;. Whereas Cyprus signed only 2 full tax co-operation treaties, and it saw banking deposit levels rise by 60%.

The Guardian is promoting more robust transparency treaties: which it thinks will “weed out tax evaders”.

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 amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997

Antique dealer jailed for £1.6 million tax evasion

April 25th, 2012

A West End antique jewellery trader has been jailed after being caught by the taxman fraudulently claiming over £1.6M in VAT repayments; by creating fake invoices for Rolex and Cartier watches.

Jonathan Uri Shohet (aged 45) of Baldock in Hertfordshire, ran an antique business in London’s West End. He used stolen invoice books and fake invoices to claim back VAT from HM Revenue & Customs even though he hadn’t actually purchased many of the watches that he had claimed the VAT back on.

During a routine VAT inspection HMRC tax officers discovered a number of large cash purchases – some as high as £80,000. The tax investigators then checked these “purchases” with the purported suppliers, and found that some of the transactions had never taken place. In another variant to his tax evasion Shohet used many legitimate invoices to reclaim the VAT back a second time.

During dawn raids on Shohet’s home address and business premises a safe was seized. In it the tax inspectors found a number of illicit invoice books from several watch retailers. The invoice books were forensically analysed, and Jonathan Shohet’s fingerprints were positively identified. Shohet was arrested on the 4th October 2011 at Heathrow Airport as he arrived back in the UK from Dubai. He was carrying £17,000 in cash, which was also seized.

Criminal Prosecutions
Lynam Tax Investigation Experts have a vast amount of practical experience in managing serious tax fraud investigations. If you are worried about a tax investigation 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 today on 0845 643 9997

VAT fraudster jailed after extradition from France

April 20th, 2012

A VAT fraudster, who fled the UK four years ago has been extradited from France and is now starting a 6 year prison term.

Mark Anthony McGovern, aged 49 from Dorset, was under a criminal investigation for tax fraud. He pleaded guilty to laundering £278,340.87 of criminal proceeds in April 2008, following a wider HMRC tax investigation into VAT fraud. But he then jumped bail before he was sentenced. He was sentenced to 2 years imprisonment in his absence; and a confiscation order was made ordering him to pay £278,340.87 by April 2009, or his sentence would be increased to 6 years – and he’d still have to pay the money to HMRC.

Relentless in pursuit, the taxman issued a European Arrest Warrant for him. He was finally tracked down by the French police near Montpellier this March, arrested and extradited back to the UK. HMRC continue to seek recovery of the money.

IT guy guilty in tax fraud

April 17th, 2012

An IT consultant for City of London banks, who failed to declare almost £2 million of income, was found guilty yesterday of income tax evasion.

Stephen Maxwell, aged 53 from Dalbeattie, Dumfries and Galloway, was found guilty of tax fraud following a tax investigation into his business records and Tax Returns by HMRC criminal tax investigators in Leeds.

Between 1999 and 2008 Maxwell worked as an IT consultant for City of London banks. In order to scam the taxman he arranged for his fees to be paid to companies registered in Gibraltar and the Isle of Man – of which he was a hidden beneficiary. From 2005 his income was paid to a UK registered company, but which never made any tax returns. The total loss to the Exchequer from his tax evasion was £635,015. He will be sentenced shortly.

Plumber jailed for tax fraud

March 27th, 2012

A West Midlands plumber was jailed today for 12 months after being found guilty of tax evasion. At the same time HMRC announced that 9 more plumbers have been arrested and criminal investigations are ongoing.

David Williams, aged 53 of Sandwell, had pleaded guilty to charges of Evasion of Income Tax, contrary to the Taxes Management Act 1970 at Wolverhampton Crown Court. He was alleged to have evaded £91,000 of income tax and national insurance during 10 years’ trading as a self-employed plumber.

Plumbers had been offered a simplified tax disclosure facility in 2011, with most being charged a penalty of 10% of tax owed. The taxman said: “Today’s sentencing is a result of our drive to clamp down on tax evasion committed specifically by plumbers, gas fitters, heating engineers, electricians and others who fail to declare their earnings and pay the right tax. “

HMRC have a rolling programme of time limited disclosure facilities for different trades. Currently they are offering a disclosure facility to electricians and e-traders. Once these disclosure opportunities close, taxpayers who have not come forward but are found to have unpaid tax liabilities can face higher penalties, rising to 200% of the tax unpaid, and in some cases could face criminal prosecution.

What does this mean for me?
Where a trader wants to make a disclosure they can do so whilst the specific trade’s disclosure facility is still open. Lynam Tax can assist with this. Once that specific trade’s disclosure programme has closed there is still an opportunity to make a disclosure on favourable terms, and to avert prosecution, using the Contractual Disclosure Facility. Lynam Tax Enquiry Experts have massive experience in handling Contractual Disclosure Facility cases and can advise more on this issue.
*For a free, private, no obligation consultation, call Paul Lynam today on 0845 643 9997

Relying on (wrong) HMRC advice is OK

March 21st, 2012

A self-employed radio presenter was subject to a business tax investigation. The taxman disallowed her claims for expenditure on “premises” and also on “wardrobe” (i.e. clothing). On appeal to the Tax Tribunal her claim for expenditure on clothing was allowed: even though the Tax Tribunal said that, in law, she should not be entitled to a deduction.

Ms Louise Stones claimed that she had bought the specific articles of clothing for outside broadcasts – where she was expected to have a “star”-like appearance. The First Tier Tax Tribunal agreed (Stone v HMRC, 2012, UKFTT 110) with HMRC that such expenditure was not allowed as it was not “incurred wholly and exclusively for the purpose of the trade”. However, Mrs Stones had given evidence at the Tribunal hearing that she had previously had a number of meetings with tax officers who had advised her verbally that this type of wardrobe costs expenditure was allowed. The judge stated that the wrong advice given by the tax officer “amounted to a misdirection” and that the taxpayer “was entitled to rely” on that advice; even though it was wrong. Therefore, the Tribunal allowed her a deduction for those costs. They disallowed the deduction of the premises costs on the simple grounds that she had not kept any receipts: even though HMRC had previously advised her to do so.

What does this mean for me?
If you are completing your accounts, tax computations, or tax returns, and in doing so are relying on the advice which you have been given from HM Revenue & Customs, whether by telephone, at a meeting, or in any of their published information, or their website: then it would be good practice to keep a note of this with your general tax papers. If you then suffer a tax enquiry, you should be able to prove on challenge that you have been acting on the basis of HMRC advice. If that advice turns out to be wrong then, in that instance, not only should you avoid a tax geared penalty on the grounds that you have not been careless; but even if the expenditure etc is not allowable you may be entitled to a deduction, if you have claimed it on the basis of HMRC advice.

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 Paul Lynam now for a confidential and no obligation discussion on: 0845 643 9997.

End of term report: NAO on HMRC’s Compliance and Enforcement Programme

March 14th, 2012

The National Audit Office has reviewed the Taxman’s performance in delivering improvements in its tax “Compliance and Enforcement Programme”: its plan to bring in more money from investigations into tax evasion and tax avoidance.

What was the Result?
The tax inspectors collected £4.32 billion of additional “yield” (i.e. extra tax, interest and penalties) in tax investigations between 2006 and 2011. It also forecasts an additional £8.87 billion of yield from more tax enquiries between 2011/12 and 2014/15.

HMRC has introduced new IT capabilities to identify incidences of tax evasion more effectively, although it is not yet exploiting the full potential of the new systems.

The Tax Compliance and Enforcement Programme cost £387 million to 2011/12 and was made up of over 40 projects (e.g. the Liechtenstein Disclosure Facility, the Swiss Tax Agreement, the Offshore Coordination Unit, various Tax Investigation Taskforces).

The NAO said: “This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which will strengthen HMRC’s compliance work in future”.

What does this mean for me?
If you are undergoing a tax investigation, or have tax irregularities which you would like to disclose to HMRC – so as to regularise your affairs and avoid prosecution, then Lynam Tax Enquiry Experts can help you.

For an initially free and wholly confidential discussion: phone Paul Lynam now on 0845 643 9997

Payback time for jailed accountant

March 1st, 2012

Convicted tax fraudster, and former accountant , Christos Charalambous must now pay HMRC back £2,462,175 following his conviction for tax fraud. If he does not pay the money back within 10 months, he faces an extra eight years in jail: on top of his current 8 years sentence for tax evasion.

Tax cheat Charalambous (aged 60) of Palmers Green, London N13, was the sole proprietor of Charltons Accountants. He was born in Cyprus and moved to the UK in 1970. He was found guilty on 6 counts of Cheating the Revenue of £11.2m in June 2010 and is currently serving an 8-year prison term. He was convicted of submitting over 6,000 fraudulent Self Assessment tax returns on behalf of his clients.
He would include fictitious expenses claims on his clients returns without showing them what he had included. He arranged to receive the clients’ repayments from HMRC, and would then deduct a minimum of 15% as a fee, and then repay the balance to his unquestioning clients. He also understated his own client fee income by £807,406.67, and failed to register, declare or pay VAT due on his accountancy firm, Charltons; which was liable to VAT of £180,082.

The total amount of repayment claimed by Charalambous was £11.2 million. The taxman is recovering the rest of the money from former clients who were given the fraudulent tax rebates. Charalambous has been an accountant for over 30 years. From 1979 to 2005, he was a Chartered Accountant. In November 2005, he was excluded from the Institute of Chartered Accountants in England and Wales for failing to co-operate with the Inland Revenue.

Penalty Notices for late Self Assessment Tax Returns

February 14th, 2012

The taxman is sending out 850,000 penalty notices to people who did not send in their 2011 Self Assessment Tax Returns on time, over the next fortnight.

The initial penalty is £100. Anyone who still hasn’t sent their return risks further penalties. If tax return is more than three months late the penalty will be an additional £10 for each day it remains outstanding, up to a maximum of 90 days (i.e. £900). After that the penalties become even more severe and are based on a percentage of the tax unpaid.

Although the deadline for receiving online returns was 31 January, this year HMRC is not issuing penalties to people who sent their 2010/11 return online on 1 or 2 February, following strike action at HMRC’s call centres on 31 January.

People who get a late-filing penalty can appeal against it if they think they have a reasonable excuse for not sending back their tax return in time, or they think a penalty should not have been issued for any other reason. Appeals should be made in writing by 31 March. The taxman says: “Examples of a reasonable excuse could include a family illness or bereavement, or a delay in HMRC sending out an online activation code”. Late appeals received after 31 March will be considered, if you can show that you had a reasonable excuse for missing this deadline. Also, under a new initiative, HMRC has confirmed that anyone who receives a penalty, but who believes they don’t need to be in the Self Assessment system, can contact them. If the taxman agrees, the return and therefore the penalty will be cancelled.

What does it mean for me?
The new penalties for late Self Assessment returns are:

an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;

after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;

after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and

after 12 months, another 5% or £300 charge, whichever is greater.

There are also additional new penalties for paying late of: 5% of the tax unpaid at: 30 days; 6 months; and 12 months (i.e. up to 15%, plus the daily penalties).

Will Lynam Tax Investigation Experts Help Me?
If you are undergoing a tax investigation, or have tax irregularities which you would like to disclose to HMRC – so as to regularise your affairs and avoid prosecution, then Lynam Tax Enquiry Experts can help you.
*For an initially free and wholly confidential discussion: phone Paul Lynam now on 0845 643 9997

Taxman targets e-traders

February 1st, 2012

As part of their rolling programme of campaigns to provide taxpayers with opportunities to voluntarily put their tax affairs in order, HMRC are now targeting the group they call e-traders.

The e-Markets Disclosure Facility is aimed at people who are trading online through an online marketplace or online auction (e.g. ebay), to sell goods or services as a business but aren’t paying the right amount of tax. The e-MDF offers a simplified method of making a disclosure to HMRC along with a guaranteed low penalty. Anyone wishing to use the e-Markets Disclosure Facility has to do register their intention with HMRC by 14 June 2012.

After the end of the deadline HMRC say that they’re going to use vast amounts of intelligence which they have gathered in order to investigate those who do not come forward. Anyone found to have underdeclared their tax as part of those investigations could face penalties of up to 200% and possibly face criminal prosecution.

What does this mean for me?
If you sell goods or services online then you need to consider whether this amounts to a taxable activity. If it does you need to calculate the taxable profits, declare these to HMRC, and pay the tax over. Lynam Tax can assist with this. The e-Markets Disclosure Facility provides a simplified method of making such a disclosure. If you do wish to disclose tax fraud and miss this opportunity then favourable terms can still be obtained using the Contractual Disclosure Facility. Lynam Tax Enquiry Experts have enormous experience of dealing with such tax disclosures and can advise further on these issues.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.