HMRC's Tsunami of New Powers

The FT reports that the UK is preparing to triple the number of prosecutions of “serious and complex” tax evaders using a "tsunami" (a quote made by a nameless tax official) of proposed new powers.

An HMRC unit, combining civil and criminal investigations teams, will spearhead a crackdown that George Osborne claims will increase tax revenue by £7.2BN.

However, as with all hyped promises of greater tax revenues, it is likely HMRC will end up going for easy to pick low hanging fruit rather than those with top notch lawyers and tax advisers.

Even the Office for Budget Responsibility has raised doubts about the extent to which the planned new tax measures will help the chancellor close the deficit.

The proposals include introducing “strict liability” in tax cases. This would mean that claiming evasion had been accidental would be no defence unless there was a “reasonable excuse”. A second is for a charge that could be brought against companies, rather than individual executives or directors, that evade tax, as well as the agents that help them.

It is noteworthy that HMRC are loudly reminding everyone that the Liechtenstein Disclosure Facility is to close at the end of this year. This indicates that HMRC may not be as confident as it claims about being able to hit high targets with its new powers.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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Yields Disappoint

It seems that HMRC has thus far only collected around £13.9M from secret bank accounts in the Crown Dependencies.

The Treasury expectations had been much higher, £320M by now, with a long term expectation of around £1BN.

The FT reports that just over 400 people have so far come forward to own up to previously undeclared accounts in the Isle of Man, Jersey and Guernsey. They used a ‘disclosure facility’ that offered reduced penalties to former tax evaders.

Fiona Fernie of Pinsent Masons said that taxpayers with large amounts of unpaid tax were likely to be making use of another tax amnesty, known as the Liechtenstein disclosure facility (LDF), which offered better terms and immunity from prosecution. 

The LDF had raised just under £1.1bn from 5819 disclosures by the end of March.

Ms Fernie said another possible explanation of the low yield was that the scale of tax evasion across the Crown Dependencies was not as extensive as many assumed.

“There is likely to be some non-compliance, but more often than not it will be technical in nature — or based on simple mistakes rather than non-legitimate structures.”

Maybe not quite so many people aren't quite as dishonest as HMRC and the Treasury had hoped for?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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HMRC Faces Legal Challenge Over LDF

Accountancylive reports that HMRC could face a legal challenge over its decision to offer UK taxpayers with undeclared HSBC Swiss bank accounts the chance to settle via the Liechtenstein Disclosure Facility (LDF), rather than prosecuting them for tax avoidance which would have seen many pay higher penalties.

Solicitors Leigh Day have been instructed by global online campaign group Avaaz to send a ‘pre-action’  letter to HMRC regarding the tax authorities’ actions over the Falciani list of names of around 3,600 UK taxpayers (also referred to as the Lagarde list).

The letter invites HMRC to explain the basis and terms on which it made the LDF offer; explain how many taxpayers used the LDF settlement and why this was possible as their accounts were in Switzerland at the time; and provide an analysis of the impact on tax receipts.

HMRC has 30 days to respond to the Avaaz letter, after which the group can apply to a judge to launch the review.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

LDF Set To Fall Short of Target

Unsurprisingly, despite the hype at the time that it was created, the Liechtenstein Disclosure Facility (LDF) is to fall well short of the £3BN yield promised by HMRC in 2012.

AccountancyAge reports that it has generated £833M, and has only 18 months left to run.

Irwin Mitchell is quoted: 

"I suspect that the eventual yield will fall woefully short of that target, and, based on figures to date, is likely to be in the region of £1.2bn. Further changes to the scheme are likely to make this figure worse rather than better."

HMRC disagree:

"Our experience from previous opportunities such as the Offshore Disclosure Facility and New Disclosure Opportunity is that the majority of disclosures come forward close the end date - 5 April 2016 in the case of the LDF."

Time will tell!


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's Swiss Miss

HMRC has sent out letters to UK holders of Swiss bank accounts warning that they must settle their liabilities, and giving them the option of using the Liechtenstein Disclosure Facility.

However, John Cassidy, tax investigations partner at Crowe Clark Whitehill, says that these letters are written in exactly the same way as the 6,500 letters sent to this target group of individuals last September.

Whilst this is all very well to use the same wording etc, Mr Cassidy notes that some of his clients (who had received this letter) had already signed the LDF agreement and therefore did not need to be notified by HMRC in this way.

A spokesman for HMRC is quoted by International Adviser as confirming that the letters were sent out “as part of an agreement between the UK and Switzerland, which came into force on 1 January 2013. HMRC is engaging with all UK taxpayers who have agreed to details of their investments and accounts in Switzerland being shared with the UK by the Swiss tax authorities, under this agreement.”

However, waste of effort aside, I have to say I am reassured and pleased to see that the word "taxpayers" has crept back in to the HMRC lexicon.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

A Billion Here, A Billion There

CABARET - Money

Accountancy Age reports that Dave Hartnett is claiming that the Liechtenstein Disclosure Facility (LDF) could raise up to £3BN by 2015, HMRC's original estimate was £1BN.

The question is will Hartnett still be in his job by then, and will anyone have remembered what he said anyway?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Handling Stolen Data

Here's an interesting "little" story about some stolen data files, no not the "datagate" files of 25 million British citizens, but some stolen data files from HSBC Switzerland.

HSBC stated yesterday that a former IT employee had stolen information concerning 24,000 clients and former customers.

The Times reports that the French authorities have now acquired the data, and are examining data on the 3,000 French account holders on the list.

The question hanging in the air is whether HMRC will seek to acquire this ill gotten data (or at least the portion that covers British citizens who may, or may not, have been evading tax).

Switzerland has categorically stated that it will not co-operate with any attempt by foreign tax authorities to use the data. HSBC have also stated:

"We will not support any authorities seeking to use stolen data in pursuit of tax inquiries."

However, HMRC have "form" in this area as they acquired stolen data relating to Liechtenstein bank accounts three years ago.

Whilst the Swiss may not offer up any details, the French authorities who now have the data may well be less fussy.

Tax evasion is illegal.

However, should a government organ be using illegally acquired data to pursue suspected tax evaders?

Do two wrongs really make a right in this case?

In some countries, evidence acquired without due process (eg a warrant) is deemed inadmissible.

Doubtless there may be many who argue that tax evaders (remember it has to be proven first that they are evaders) don't deserve the protection of the law. Cut down one law and others will be exposed to an overzealous state seeking to prosecute those that it deems to have acted "illegally".

Would you be happy with state organs, eg the police, bursting into your homes without due process having been followed?

Will HMRC start to pay people to commit theft on its behalf?

That is where this may well lead.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Our Man In Washington

Despite the comments on this site, and the results of staff surveys, not everyone in HMRC loathes their job.

It is refreshing to see that Dave Hartnett is like a veritable "pig in shit" when it comes to his role of "opening up" countries to HMRC inspections, and acting as the UK's envoy in Washington next week at a gathering of tax commissioners.

He is quoted in Accountancy Age:

"Nations are now working together to deal with this issue.

What [HMRC] would really like to do is open up Switzerland.

The UK and many other governments are determined to crush tax evasion through offshore accounts and I think that's what will happen. Otherwise he may find himself posted to places that are less salubrious than Washington.

There are some countries who are resistant.

One or two tax havens would like to be back on an OECD blacklist so they can hoover up money from other people who still want to hide it."

Hartnett doesn't like countries who believe in banking and tax secrecy, adding:

"They believe that a country like the UK should have a major amnesty – not just a disclosure regime – where we forgive [unpaid] taxes and use that to make disclosures, which I don't think the UK is going to do."

Such ambition!

He bestrides the world of tax, like a veritable colossus!

Let us trust that he has not promised his bankrupt masters in Downing Street more than he (and HMRC) can actually/realistically deliver in his/their lifetimes.

Hubris is such an unforgiving mistress!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Liechtenstein Is So Bracing!

As predicted those with (as yet) undeclared offshore holdings seem to be opting for HMRC's Liechtenstein Disclosure Facility (LDF), rather than HMRC's New Disclosure Opportunity (NDO).

PwC have estimated that, with the deadline now gone for the NDO, approximately 13,000 individuals registered for the NDO.

Given the fact that the NDO has harsher penalties than the LDF this modest figure is not that surprising.

PwC estimate that the NDO will raise approximately £135M.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Cry Freedom

Data obtained by the law firm McGrigors shows that 27 people have registered with HMRC, since the Liechtenstein Disclosure Opportunity was opened on September 1.

However, HMRC have refused a similar Freedom of Information Act request wrt how many people have registered for the New Disclosure Opportunity (NDO).

The FT quote HMRC as saying that disclosure would "undermine the facility itself".

Fair enough, disclosing that very few people have taken up the NDO will doubtless encourage a "herd" mentality amongst tax evaders and they will simply follow the "majority" who haven't registered; ie they won't register.

Therefore, even though HMRC have refused to provide the data, it is clear that the refusal to do so indicates that take up of the NDO has been very low.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

The Dead Duck

It seems that HMRC's New Disclosure Opportunity (NDO) has, so far, not been the rip roaring success that HMRC had forecast; despite Dave Hartnett's foray onto YouTube.

The NDO has not yet attracted the disclosure of significant numbers of undeclared offshore accounts, thus the original forecasts of it generating £500M-£1BN may well be rather wide of the mark.

Andrew Watt, managing director, tax disputes and investigations for accountancy firm Alvarez & Marsal Taxand, said:

"There is definitely a perception in some quarters that the NDO is a bit of a dead duck.

We may be a smaller organisation, but I know some of my colleagues in more well-known firms are finding the same thing."

However, the Liechtenstein Disclosure Facility (LDF) is proving to be more successful; as those who are eligible are transferring their offshore accounts to Liechtenstein and using the LDF, which attracts less harsh HMRC penalties.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

An "Exaggeration"

The BBC report that the Chancellor is expecting a windfall of £1BN in tax, being monies that should have been paid by those who have tried to evade tax by holdings secreted in Liechtenstein.

HMRC struck an agreement last month with Liechtenstein to exchange information.

The theory is that up to 5,000 British investors are thought to have funds in secret accounts in the country, this could mean an average pay-back of £200,000.

All very well, but the agreement between HMRC and Liechtenstein states:

"TIEA (Tax Information Exchange Agreement) goals and protections: The TIEA provides a number of protections designed to assure that exchange of information does not compromise the considerable privacy rights accorded to persons making use of the Liechtenstein financial centre.

Protection of existing clients:

The Liechtenstein Government has the right to decline a TIEA request for information for clients who have Liechtenstein accounts or Liechtenstein company or fiduciary structures as of 11 August 2009 (the date of signing of the TIEA).

o Purpose: This protection is designed to permit existing clients who are persons
connected to the UK for tax purposes to take the time necessary in order

(a) to consider carefully their particular factual situation and the substantial attractions of the unique and favourable disclosure facility negotiated between the Liechtenstein Government and HMRC and

(b) to obtain proper advice on the best approach for the specific client to addressing any tax irregularities.

o Criminal exception: This protection will not apply in cases that relate to a criminal tax matter in respect of which the requesting party has formally commenced a criminal investigation (as defined in the TIEA).

o Exit requirement: For those existing clients who decide to close their
Liechtenstein accounts and transfer out, liquidate or terminate their Liechtenstein
companies or fiduciary structures before April 2015, this possibility of protection
by the Liechtenstein Government of their information continues indefinitely in the
future....

Protection against retroactive application: Where neither of the protections above
applies, the information exchange is still limited to taxable periods that begin in 2010 in respect of criminal tax matters or after March 2010 for all other matters."

This means, to my reading anyway, that a determined tax evader can close his/her account and move it to another tax haven safe in the knowldege that the agreement with Liechtenstein guarantees confidentiality.

What about the fact that tax evasion is a criminal act?

HMRC will have to have commenced a criminal investigation:

"Criminal exception: This protection will not apply in cases that relate to a criminal tax matter in respect of which the requesting party has “formally commenced a criminal investigation” (as defined in the TIEA)."

Does HMRC really have the resources to start criminal investigations into the alleged 5,000 tax evaders sitting in Liechtenstein?

I doubt it.

The £1BN is most assuredly an "exaggeration" designed to grab the headlines.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Confusion

There appears to be a wee bit of confusion in the HMRC bunker over the rules wrt its recently announced tax amnesty for undeclared offshore accounts, and the treatment given to those with accounts in Liechtenstein.

International Adviser reports that the confusion may allow tax evaders to switch assets to Liechtenstein, in order to benefit from the less onerous fine.

There are two disclosure facilities:

- The Liechtenstein Disclosure Facility (LDF)

- The New Disclosure Opportunity (NDO).

Both require filing notifications of intention to disclose by 1 September.

There appears to be the opportunity for tax evaders to move their undeclared offshore holdings (outwith Liechtenstein) to Liechtenstein, and declare under LDF rather than NDO.

International Adviser (IA) asked HMRC about this and was told that the LDF was:

"only for new or existing investments [in Liechtenstein] at 1 August 2009".

However, in response to another IA query, HMRC apparently said that individuals with investments that have been made directly with offshore financial intermediaries "will be able to move their money to Liechtenstein after the end of the registration period for [the] NDO, and then use the full terms of the Liechtenstein disclosure facility".

The LDF offers a 10% cap on the penalties, compared with the 20% cap on NDO.

In its statement today, HMRC said:

"HMRC has the legal power to obtain information on investments where they have been opened through a UK branch or agency – say a branch of a bank in the UK.

Anyone with investments of this sort could move their investments to Liechtenstein after the end of the registration period for NDO, and use the Liechtenstein disclosure facility.

But they will get the same terms as the NDO.

People with investments they have made direct with offshore financial intermediaries will be able to move their money to Liechtenstein after the end of the registration period for NDO, and then use the full terms of the Liechtenstein disclosure facility.

They will of course have to disclose everything to HMRC in that case, or the new Liechtenstein laws will mean that they have to remove their investments or face sanctions."

Well, I am none the wiser.

Maybe HMRC are being paid commission for advertising Liechtenstein as a tax reduction opportunity?;)

Or maybe they simply haven't thought it through yet?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"