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January 27th, 2012

The UK’s chief Tax Inspector – Dave Hartnett – accused UK householders who pay tradesman cash of helping to “diddle” the country, in an interview with The Daily Telegraph today.

He said people who pay cash in hand to tradesmen are “diddling” the economy and diverting money from hospitals and schools and leading to deeper cuts in spending on public services. And presumably from Civil Servants’ pensions: although the soon to retire Mr Hartnett who has a reputed £1.7 million pension pot didn’t mention that.

HMRC’s Permanent Secretary has been waging a verbal war against tax fraud for some time now. He encouraged everyone to fulfil their “duty to ensure that other people do not evade paying their share of tax”. Mr Hartnett urged anyone who suspects wrongdoing to telephone the taxman’s whistle-blower hotline, saying: “Every time someone pays cash in order not to pay VAT, the nation gets diddled”. He promised to follow up the information received with tough tax investigations: saying “We are getting better and better at finding people who receive cash.”

The Telegraph also reported that the Revenue is planning a sixfold increase in criminal prosecutions to 1,200 next year.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries. We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

Taxman-made Global Freezing: Assets Locked by Court Order

January 25th, 2012

In cases of serious fraud, where the taxman believes there is a risk of not being able to secure full payment, HMRC can take the extreme action of freezing all of a taxpayer’s assets. In a recent case in the Chancery Division they secured a worldwide freezing order against taxpayers they alleged were involved in large-scale fraud.

In the case of CIR vs Cozens and Others, the taxpayers argued that they were not aware that a fraud had been taking place, and therefore no freezing order should be allowed. However, the judge in the Chancery Division issued the worldwide freezing order for the following reasons: HMRC had a good arguable case and there was a real risk that the taxpayer would otherwise put his assets beyond the reach of Her Majesty’s Revenue & Customs.

This type of extreme action by the taxman is usually only contemplated in Criminal Prosecution cases and in the most serious cases of Suspected Serious Fraud (Code of Practice 9) operated by the elite Specialist Investigations unit.

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

“I will survive!” Not! Ex-taxman taunts with 70’s disco anthem!

January 13th, 2012

A leading professional tax advisor, David Perrin, has been found guilty of trying to fiddle HMRC out of £70m, in a Gift Aid tax scam. Perrin, aged 46, of Luton, had worked for the Inland Revenue in the late 1980s and early 1990s. He went on to become Deputy Managing Director at Vantis Tax Ltd. He now faces a possible prison sentence and confiscation of his assets.

He devised and operated a bogus tax avoidance scheme, which purported to exploit a loophole in the law on giving shares to charity. From 2005 to 2006 he promoted the tax dodge to more than 600 wealthy taxpayers; charging fees of more than £2m in the process. But the sting was in the tail. Rather than relying on a technical loophole in the law, Perrin’s scam relied on deception and evasion.

Vantis’ clients included a number of celebrities, although there is no suggestion clients knew of the fraudulent aspects of the tax dodge.

In an act of extreme hubris Perrin recorded a debased version of the Gloria Gaynor classic “I will survive”; including a verse: “They should have changed that stupid law, they should have buggered charity, but they have left that lovely tax relief, for folks to pay to me.”

Perrin’s fiddle involved advising clients to buy shares, which were only worth a few pence each, in 4 new special purpose companies he had set up. After listing those companies on the Channel Islands’ Stock Exchange he then, in a practice commonly known as ramping, he paid his stooges – from a secret offshore bank account – to buy and sell the shares: in order to artificially inflate their market price. In the next step in the convoluted racket, he then instructed the share owners to donate over 300 million shares – which were worthless but had artificially inflated values – to a number of innocent UK-registered charities. The clients then claimed £70m Gift Aid tax relief, as if they had donated shares worth the falsely inflated values.

Vantis’ London offices were raided by HMRC tax investigators in 2006. At the time it was listed on the stock market. It subsequently went into administration in 2010; at which time it was the UK’s 13th largest accountancy firm by fee levels.

Perrin was convicted of “dishonestly submitting, facilitating and inducing others to submit claims for tax relief”. The taxman has begun Confiscation Proceedings against him and he will be sentenced on 9th February.

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

3 Swiss Bankers Charged With Aiding Tax Evasion

January 11th, 2012

The tax authorities in the USA are prosecuting 3 Swiss bankers on charges of aiding tax evasion: in the latest global crackdown on tax fraud linked to secretive offshore bank accounts.

The New York Times (David Jolly) reported that the oldest Swiss bank, Wegelin & Company, has confirmed that 3 of its employees “had been indicted by prosecutors in New York for helping United States taxpayers to hide more than $1.2 billion from the Internal Revenue Service.”

On 3 January 2012 the Southern District of New York’s attorney announced the indictment of three men living in Switzerland: Michael Berlinka age 41, Urs Frei age 51, and Roger Keller age 47. They are accused of helping to set up dozens of secret accounts in Zurich, and of helping clients to ‘‘to hide from the IRS both the existence of certain Swiss bank accounts, as well as the income they generated.” They face maximum prison terms of 5 years each, and fines of up to $250,000; if convicted.

The New York Times also stated that the US Government is “pursuing criminal charges against 11 Swiss institutions in an effort to bring about a comprehensive agreement to ensure Americans cannot hide money in Swiss banks”.

Meanwhile in the UK Her Majesty’s Revenue & Customs has signed an agreement with Switzerland designed to flush out hidden bank accounts. The Swiss Tax Agreement gives HMRC a new power to discover whether an individual UK resident has an account in Switzerland, and to get details about those bank accounts. A new UK-Swiss joint commission will conduct a “programme of audits”, to ensure the Swiss banks’ compliance with their obligations. Then, from 2013, there will also be a new Withholding Tax (of 48% on investment income and 27% on capital gains): which will apply to anyone who has not told the taxman about those assets.

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

Employers told to check their labour providers

December 21st, 2011

HMRC warned today that there is an increased risk that some labour suppliers may be involved in tax evasion. Where it can be shown that a business knew, or should have known, that transactions entered into were connected with the fraudulent evasion of VAT, the business could lose its right to recover the VAT incurred on those transactions. Businesses particularly affected include those in catering, food processing, construction, hotels, leisure and security.

HMRC has also warned there is a risk that employers could unknowingly hire workers who are in the UK illegally, or are earning below the National Minimum Wage. This could result in enquires by HMRC and costs for the business, damaged reputation and even prosecution.

The taxman says that failure to carry out “appropriate checks” may be evidence that you knew or should have known of the fraud. HMRC are not willing to tell you exactly what checks you should undertake. The checks you will need to make, and the extent of them, will vary depending on the individual circumstances. You should ask the most appropriate questions required to protect yourself in the particular circumstances of your individual transactions.

Her Majesty’s Revenue & Customs have suggested that businesses should ask

Does the labour provider need and have a Gangmaster Licensing Authority (GLA) licence?

What is the history of the business?

Is it a live company on the Companies House register?

Have you visited the trading premises? Are they consistent with the business of finding and employing workers?

Do they obtain workers from other labour providers?

Are their proposed fees realistic, allowing the business to meet statutory minimum wage and tax obligations and still make a profit?

Do they have Employers’ Liability Insurance?

Are you making payments to a third party, for example a factoring agent? If so, why?

Is the business VAT registered and set up for PAYE? Obtain a copy of the VAT certificate.

Is the business paying its workers the National Minimum Wage?

Do the workers being supplied have the right to work in the UK?

The taxman also suggests the following checks:

Check directors’ identities by asking for passports;

Ask for copies of Certificate of Incorporation, VAT registration certificate and GLA licence;

Verify VAT registration details with HMRC before you use them;

Ask for their bank details

What does it mean for me?

If you don’t carry out this due diligence, and keep records of it, you could end up losing a lot of money in unclaimable VAT, as well as facing other large tax liabilities (e.g. PAYE) and face swingeing penalties.

How can Lynam Tax experts help?
*If you are unsure as to how to carry out the appropriate due diligence measures, or are undergoing an enquiry and HMRC are alleging that you have failed to carry out appropriate checks, then you may need specialist help. Lynam Tax specialists have extensive experience with regard to the labour supply industry and HMRC enquiries.
For a free initial consultation called Paul Lynam now on: 0845 643 9997

Tax fraud family jailed

December 20th, 2011

A father, mother and their three daughters from Tooting, South London, were found guilty of a multi-million pound tax fraud and money laundering scam.

Isaac William (aged 61) ran a business supplying security guards to the construction industry. HMRC investigators found that between 1999 and 2008 his businesses received income of £6m. However his combined partnership, personal income tax, VAT and PAYE returns to HMRC declared the income as £1m. Some of the undeclared profits were transferred from the business bank accounts into his wife’s and daughters’ personal accounts.

Isaac William pleaded guilty to ten counts of tax fraud was jailed for failing to declare £5m of business profits and not paying the correct amount of tax due. He was sentenced to four years imprisonment on each count, to run concurrently. His wife Venus (54), and their three daughters Sophie William (26), Sylvia William (34) and Maria Gunasekara (33), were also sentenced for laundering £1.3m from the business into their own bank accounts.

The family used the money to finance the purchase of two properties in Pakistan, and properties in the UK. They withdrew large amounts of cash and transferred some of it into bank accounts they held in Dubai and Pakistan. The taxman is taking proceedings to confiscate the proceeds of their crimes.

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

New teams for SME avoidance schemes

December 15th, 2011

HMRC have created 4 specialist teams to handle Compliance Checks into direct tax avoidance schemes used by Small and Medium Enterprises (SMEs).

The taxman is transferring around 2,000 SME Compliance Checks into the new by the end of January 2012. The teams will focus on direct tax avoidance schemes. However Employee Benefit Trust cases will not be included. Any business currently undergoing a Compliance Check in regard to such an avoidance scheme will be written to by the new office.

The purpose of the new teams is to create greater focus and sharing of knowledge within HMRC. It is likely to be accompanied by a faster and more hard-hitting way of dealing with cases. Generic letters are likely to be prepared. If these follow the pattern of previous teams then voluminous documentation requests are likely to soon follow. It is likely that HMRC will try and target test cases to fast track to the Tribunal.

What does this mean for me?

If you have purchased an off-the-shelf avoidance scheme then you are likely to be subject to more intense scrutiny. It is likely that the promoters of the scheme have already considered all of the legal and technical issues. However, you may require assistance in dealing with the practicalities of an HMRC enquiry; particularly in dealing with the information requests. If the case is likely to proceed to Tribunal then specialist advisers may well be required.

How can Lynam Tax Enquiry Specialists help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.

Tutors and Coaches Deadline Looms

December 7th, 2011

HMRC warned today that private tutors and coaches have less than a month left to make a disclosure under the so-called Tax Catch Up Plan.

This is a simplified disclosure programme which will be followed up by full investigations of those who do not come forward. Anyone wanting to take part has to register by 6 January 2012. The Tax Catch Up Plan is aimed at anyone providing tuition or coaching, regardless of whether they have a registered qualification, or whether it is a main or secondary income; and on which the full tax has not been paid. The scheme is available to people teaching traditional academic subjects, fitness and dance, musical instruments, art, life coaching, personal training and other instruction.

The taxman is warning that: “Once this disclosure window closes …those who have not come forward but are found to have unpaid tax liabilities will face investigation, maximum potential penalties of 100 per cent of the tax evaded, or possible criminal prosecution”.

This is not a tax amnesty. The full amount of tax, interest and penalties still has to be paid. But the process is quicker and simpler than normal. It is mainly suitable for people with straightforward affairs and only one source of undisclosed income. More complex disclosures may benefit from being dealt with outside of this scheme.

Statutory Residence test put on back burner

December 6th, 2011

The much rumoured Statutory Residence Test has not been included in the subjects for inclusion in the 2012 Finance Bill. The government has indicated that the draft proposals are likely to be included in the Finance Bill 2013.

However, a lot can happen in that period and therefore it cannot be certain that the Bill will be introduced at all, or that any new rules will be enacted in the form presently envisaged. This uncertainty is not particularly helpful. Anyone considering their UK tax residence position will now have to continue relying on the uncertainties of case law and HMRC’s disputed interpretation in booklet HMRC 6. This is likely to lead to a number of other disputed cases, such as the recent well-known Gains-Cooper case.

In the meantime the tests for UK residence remain unchanged, albeit ambiguous and lacking complete certainty. This is a complex area where many people require specialist advice.

Lynam Tax domicile specialists have decades of experience in dealing with tax residence and domicile issues.
*Call Paul Lynam today for an initial free, confidential, no obligation, discussion: 0845 643 9997

Another HMRC disclosure campaign: Electricians Tax Safe Plan

December 3rd, 2011

As part of a rolling series of simplified disclosure campaigns HMRC has announced that it will be launching yet another campaign in February 2012. That campaign will be aimed at electricians and electrical fitters and will be known as the Electricians Tax Safe Plan (ETSP).

This will be very similar to the recent campaigns relating to both plumbers and to tutors and coaches. The campaign is unlikely to be available to unqualified electricians or anyone who is not a member of an established trade body. The taxman defines an electrician as being “anyone who installs; maintains; or tests: electrical systems; equipment; or appliances, under stringent safety regulations”.

This is not a tax amnesty. It is a mechanism whereby people in the relevant trades, with tax irregularities, can come forward and make a disclosure using a simplified process. Although the process is simplified most electricians will still require professional help in making a disclosure. For people with one-off technical irregularities, in one or two years, the scheme can be very straightforward, and does offer reasonably low penalties. Although the penalties are actually no lower than would normally be achieved in a regular disclosure. However, for traders with significant omissions of profits, and in particular those trades where the irregularities go back more than four years, the campaigns can be problematic.

Although they have not announced any further details as yet, it is highly likely that HMRC have obtained a large amount of data regarding payments made to electricians from various sources. It could be that they have obtained the membership list of the relevant trade bodies. Also, they will be looking at payments made to electricians from public bodies, or in respect of special returns made by local authorities, large companies and housing associations. This would include any payments made through any grant, including grants relating to insulation and solar panels.