A Yorkshire businessman Jason Butler has been jailed for 9 years following a complex tax investigation by HMRC Fraud Investigation Service. Mr. Butler had masterminded a £9.8 million VAT fraud involving a complex chain of offshore companies in the US, Gibraltar, Spain and the UK and used fake invoices. Mr. Butler used the funds from the VAT scam to live a lavish lifestyle including expensive cars such as a Rolls Royce, Ferrari, Lamborghini, a Mercedes SL350 and a speed boat. He also owned various luxury house in Marbella as well as 96 properties in Leeds. Read more…
Tag Archives: tax investigation
Complex tax investigation closed
This client was referred to us by a firm of accountants in North London. The client ran an Italian restaurant and had been subjected to a HMRC investigation for almost 3 years with tax assessments and penalties in excess of £130,000 (involving VAT, corporation tax and income tax). By the time the case came to us, it was fairly late as an appeal had been submitted to the First Tier Tax Tribunal and Statements of Case exchanged. When we reviewed the case and discussed the background with the client, we found there was new information that had not been made available to HMRC previously and could help close the matters outside of the court. After long negotiations, HMRC agreed to have an Alternate Dispute Resolution (ADR) meeting. At the ADR meeting, which went on for approximately 7 hours, we were able to put forward our case and convince HMRC that the assessments were excessive and unreasonable. HMRC officers understood the client’s position and finally agreed to reduce the liability to 10% of the original figure. This was a very big relief for our client as he was considering putting his company into liquidation and declaring bankruptcy. We are grateful to the HMRC officers for their professional behaviour and demonstrating their full commercial understanding in bringing this case to a closure.
Tax investigation closed through Contractual Disclosure Facility (CDF)
This client came to us from the Midlands and was already under a tax investigation for failing to disclose income. We considered the merits of the case and suggested that a full disclosure under Contractual Disclosure Facility (CDF) would be the most effective way to conclude matters in contrast to a lengthy exchange of correspondence with HMRC inspector resulting in tax and high professional fees. The proposal was put forward to HMRC inspectors and they agreed to receiving a CDF. A full CDF submission was prepared and submitted which was fully accepted by HMRC. The tax and penalties payable as a result were quite minimal compared to what had initially been estimated. We are grateful to HMRC officers involved for their cooperation and support.
Our analysis: This was an interesting case where our firm and HMRC worked in cooperation to bring an early and effective closure to a tax investigation. Had the conventional route of entering into prolonged correspondence and dispute been entered, this would have taken significantly longer and cost the client more in professional costs, tax and penalties etc. Although the CDF route may not be applicable in all circumstances but it is very useful to be able to identify the right strategy when approaching a tax investigation.
Large VAT investigation successfully closed after 9 months with no tax to pay
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.
HMRC’s VAT and Customs investigation closed after one meeting
This client runs a retail outlet in London and had received a VAT and Customs investigation from HMRC. The client was naturally quite nervous despite being up to date and having paid all their taxes due. Our tax specialists reviewed the client’s records in depth and proposed to meet with the HMRC inspectors. The meeting lasted for approximately an hour and soon HMRC officers accepted that there were no major issues with the company’s VAT and Customs liabilities and that the client’s arrangements were in good order. This was subsequently confirmed in writing by HMRC. We are grateful to the HMRC officers involved for their quick understanding of our client’s business and their pragmatic approach bringing the enquiry to a closure.
Our analysis: This was an interesting case where our firm and HMRC worked in cooperation to bring an early and effective closure to a tax investigation. We have seen numerous cases where due to the wrong or defensive stance taken by ordinary accountants, the relationship is tarnished and causing irreversible damage to the enquiry.
Worldwide Disclosure Facility – Closing on 30 September 2018
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.
Tax Appeal lost for undeclared sales
Aziz [2018] TC 06405
The First Tier Tribunal has decided to uphold the income tax, national insurance and VAT assessments including penalties as issued by HMRC. The appeal was filed by the appellant following HMRC’s investigation including covert/ undercover inspections. HMRC’s covert tests revealed that the appellant had not been fully declaring his sales. Initially HMRC had set the penalties very high for deliberate behaviour. Following prolonged negotiations by the representatives, HMRC agreed to reduce the penalties to 19.8% under careless behaviour.
Jailed after Tax Fraud Investigation
A businesswoman, Claire Gould, resident of Houghton Le Spring has been jailed for VAT fraud. Ms. Gould used fake invoices to claim back VAT of £175,000 from HMRC. Her fraud was uncovered after an investigation by HMRC’s specialist team. She has received a confiscation order of £80,509 but has only paid back £7,000. If she fails to pay the confiscation order within two months, she will face another eighteen months in prison. Read more..
Jailed for Tax Fraud
1- John Hamill, resident of Stwarton, Ayrshire trading as a recycling consultant has been jailed for tax fraud after steeling more than £309,000 in tax. Mr. Hamil worked as the owner of GH Consulting from his home. He made profits of £1.3m from 2006 to 2014 but did not register or pay his tax due. On 3 April 2018, at Kilmarnock Sheriff Court, Mr. Hamil pleaded guilty to Income Tax fraud. He was sentenced to twenty one months in prison. Read more..
Corporation Tax Investigation Closed
This case was referred to us from another accounting firm in London. The case related to a retail company and there was a dispute on some large items that had been claimed in the tax return. The HMRC inspector disagreed with the deductions and had disallowed these resulting in a significant tax liability together with large penalties. The case had been going on for over 3 years before our firm was appointed. Our tax investigation specialists met with the HMRC officers involved and after long discussions and negotiations agreed that full relief will be allowed for the expenses claimed. The relief was split into revenue and capital portions which meant that the client will get relief in two stages compared to no relief before the case came to us. The final settlement meant that the tax demand from HMRC was significantly reduced and the penalties were cancelled. Our firm is grateful to the HMRC officers involved for their cooperation and understanding our client’s position.
Our analysis: This case came to us after roughly three years of the initial enquiry letter. During this period, various areas of dispute arose and matters kept getting worse not mentioning the professional costs that were incurred. After we took on the case, it took us a few weeks to resolve matters and close the case. Our advice has always been to appoint a specialist as early as possible to reach a quick and pain free resolution.