This case was referred to us by an accounting firm in London. The client was under Code of Practice 9 investigation and had been let down by his previous tax advisers in Wales who claimed to be experienced forensic accountants.The client has over 10 years of undisclosed income from various sources. Our tax investigation specialists carefully reviewed the case and made the required disclosure to HMRC. A tax liability was agreed that was accepted by both HMRC and our client.
Our analysis: Code of practice 9 cases require significant experience of handling tax investigations and the tax law. If care is not taken, the immunity from prosecution can be lost and can result in custodial sentences.
This client is based in Essex and provides transportation services. The client had received a VAT investigation going back four years and HMRC were initially asking for a substantial tax amount together with penalties and interest. Our tax specialists considered the case in depth a found that the basis of VAT assessments raised by HMRC were incorrect. We sent our technical analysis together with supporting documentation to HMRC. Initially, HMRC refused our technical position and requested further supporting documentation. After several exchanges of technical correspondence the HMRC officers accepted that our position had been correct from the outset and that no tax was due by our client. To make matters even better, HMRC accepted that our client was due a tax refund. We are grateful to the HMRC officers involved in this case for their practical approach towards resolving this fairly complex matter.
Our analysis: This case could have dragged on for a long time and is a good example of cooperation. The main factors for early closure were establishing a good relationship with the HMRC inspectors and providing the required information in an effective manner.
The Worldwide Disclosure Facility was initiated by HMRC in 2016 to allow tax payers with offshore (non UK) income to make a full disclosure and avoid large penalties or HMRC prosecution. The disclosure facility has been widely used by UK and non UK residents and settlements reached for tax payable. HMRC had announced that the Worldwide Disclosure Facility will be closing on 30 September 2018. This means the option to make a disclosure at a lower penalty will no longer be available. From 1 October 2018, individuals with undeclared offshore income will need to make a disclosure through Requirement to Correct rules. The new rules under Requirement to Correct will impose heavier fines and sanctions.
Any non UK citizens living in the UK are required to make a full declaration if they are receiving offshore income even if that is being kept offshore and not brought into the UK.
As we are approaching the deadline of 30 September 2018, we have received a large number of queries from people wanting to make a full declaration to HMRC and to avoid the harsher penalties from 1 October 2018. If you would like to discuss making a declaration under the Worldwide Disclosure Facility, please contact us on 0207 998 1834.
This client came to us on recommendation from another firm of accountants in London. The client had substantial undeclared income for several years and was intending to fully declare to HMRC but was quite nervous about the idea and repercussions from HMRC. We made a disclosure using the Contractual Disclosure Facility or Code of Practice 9 route offered by HMRC. Through this we were able to ensure that our client is not prosecuted and also the penalties are kept to a minimal level. The client was very pleased with the outcome.
Our analysis: We have had a number of clients that have undeclared income and want to come forward. The conventional approach is to file tax returns for a number of years which can lead to immediate penalty charges and a significant chance of a formal tax investigation being opened with possible prosecution by HMRC if the case is significant. This can be costly, stressful and time consuming. A disclosure through the Contractual Disclosure Facility or Code of Practice 9 allows one to make a more cost effective and efficient disclosure providing a level of immunity from prosecution. This is a specialized and technical area and firms with experience of these types of disclosures should be used.
Jonathan Benjamin Schofield, 32, a boss of a security company, has been jailed for three years after being involved in tax fraud of almost £500,000. He cheated the HMRC by underpaying VAT, income tax and national insurance. During the tax investigation by HMRC, Mr, Schofield failed to attend several meetings and did not cooperate in any way. On the contrary he continued enjoying his lavish lifestyle which he earned through tax evasion. A confiscation order has been made to recover the tax he stole and will include the sale of his assets/ properties. Read more..