HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Monday, 4 March 2013

Dishonest Tax Agents

As per AccountingWeb there are new rules coming in wrt dishonest tax agents being liable to civil sanctions as from 1 April this year, a tribunal will determine if HMRC can impose a penalty.

HMRC have yet to issue their guidance on this, therefore it will be interesting to see how this "pans out" as and when there are some cases presented before the tribunal.

Here is the article from AccountingWeb in full:
"From 1 April dishonest tax agents are liable to civil sanctions. HMRC has yet to write their guidance but John Flood explains the provisions and their scope.

Civil penalties for persons who act dishonestly with a view to bringing about a tax loss while acting as a tax agent will be brought into effect for conduct occurring after 1 April (schedule 38 FA 2012 and 2013 S.I. No.279). Both direct and indirect taxes are covered. Penalties from a £5,000 minimum to £50,000 maximum can be applied.

Misconduct must be by an individual and dishonest, incompetence or gross negligence is not enough. Dishonesty will usually be evidenced by showing the creation or presentation of some kind of false or misleading picture. The help given must be with a view to bringing about a loss of tax revenue whether a loss actually occurs and should involve assistance in the tax affairs of a client.

Both advisory and representational acts are covered. Indirect assistance is also caught if the agent knows or believes that it will, or is likely to be used, in connection with a client’s tax affairs.

The dishonest help given must be given in the course of business. This excludes assistance provided because of friendship but this would not preclude criminal offences from occurring.

A two stage process is involved in raising a penalty. HMRC must serve a “conduct notice” which sets out details of the misconduct alleged and the normal rule should apply that HMRC has to prove their case. As substantial sanctions may be imposed this should be to the criminal standard notwithstanding the fact that the regime is civil (In re B [2009] A.C 11).

Once someone is under investigation or a notice has been served there is a duty on those who know about the investigation or are the recipients of a conduct notice to preserve relevant documentation. A criminal offence may be committed if this is breached.

If a tribunal later finds the allegations are true, or they are not contested, then a penalty can be imposed by HMRC. Opportunities exist to reduce the penalty if there is assistance to HMRC or “special circumstances” are found by them. An appeal can then be made to the tribunal on the raising of, and the quantum of a penalty. If no help is given to HMRC and the penalty is more than £5,000 then the name of the defaulter may be published.

John Flood is a retired barrister and was formerly a deputy director of Specialist Investigations at HMRC."

Tax does have to be taxing.

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