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..

Large VAT and Corporation Tax Investigation Closed

This case came to us from an accounting firm in London. After the client received the tax investigation letter from HMRC, their accountants absconded and closed their offices and stopped taking any calls or letters! The client was ultimately referred to our firm. There had been errors in the VAT returns and the accounts with respect to the level of income declared. The HMRC enquiry comprised VAT, corporation tax and self assessment for the director. In total HMRC were seeking over £350k. We spoke to our client in detail in relation to the level of business and activities including the sales trends. Our client accepted that they had been misled by their accountants and as a result had paid less tax. However, the level of sales estimated by HMRC were substantially higher than the actual sales over the previous several years. This meant that the tax assessments raised by HMRC were much higher than the actual liability. Our team of tax investigation specialists referred the case to Alternate Dispute Resolution (ADR) to present our client’s case prior to going to the First Tier Tax Tribunal. After seven hours of discussions and negotiations in the ADR meeting with HMRC and ADR facilitators, we finally reached a settlement of roughly 25% of the original amount being assessed. Our client was happy to accept this figure and HMRC also accepted that the quantum of sales omissions were not as high as initially estimated. A written agreement was reached at the end of the meeting and both parties walked out happily. Our firm is grateful to the HMRC officers (including senior officials) involved in the ADR meeting for their level of cooperation, understanding our client’s position and keeping an open mind in relation to the facts.

 

Our analysis: This was a rare case where an accountant had absconded after their client received a tax investigation letter. The level of irregularities conducted by the accountant as described by the client were disturbing and shocking both for our firm and HMRC. Our firm tried on many occasions to contact the previous accountants but their office was closed. We have come across a number of situations where a tax payer has got into significant problems due to negligence by their accountants. It is sad to see that a number of businesses do not carry out due diligence before appointing an accountant and are mainly focused on the lowest possible fee in the market where quality of work is significantly compromised. The same people then pay a lot more in taxes, penalties and professional fees after being investigated by HMRC.