Alcohol Due Diligence

This being a Friday, one's thoughts instinctively turn to booze. Here, courtesy of HMRC, is a wee primer for all those in the booze business.

Is your alcohol business carrying out the required due diligence checks to avoid becoming involved in fraud? https://t.co/Cglm0DKr0X pic.twitter.com/WMgDVV8kTW

— HM Revenue & Customs (@HMRCgovuk) July 28, 2017

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"

Come Fly With Me

Come Fly With Me Customs Officers find Drugs by a7mospheric
As per economia:

"A flight attendant who used an airline’s staff discount travel programme to smuggle cigarettes through UK airports has been caught by HMRC.

Denis Connolly, of Southport, organised over 130 smuggling trips for himself and five others, using discounted staff tickets to travel. The gang hid cigarettes and tobacco, worth £180,000 in evaded duty and taxes, in their luggage.

Connolly and his accomplice, Terence Steele, of Liverpool, made large purchases of duty-free tobacco in Spain and Portugal, which the gang then smuggled back to the UK. The smuggling gang consisted of five men and one woman. They were caught out when three of them were stopped by Border Force officers at Liverpool John Lennon Airport on two separate dates.

Zoe Ellerbeck, assistant director, criminal investigation, HMRC, said, “Airline employees hold a position of trust and abusing this privilege is a serious matter. Connolly organised subsidised travel purely for smuggling purposes. There are no excuses for smuggling, whatever your status, and HMRC are determined to recover stolen taxes.

“Tobacco fraud costs honest taxpayers more than £2.1bn a year, undercutting honest businesses, and drawing people into wider criminality.”

Connolly and Steele were each issued with confiscation orders under the Proceeds of Crime Act at Manchester Crown Court. Connolly received a confiscation order for £348,705 and Steele received one for £111,671.

After assessment of their available assets, Connolly was ordered to repay £21,543 within three months or 15 months will be added to his jail sentence, and Steele was ordered to repay £109,297 within three months or serve two years in jail."

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"

Fag Smuggling

Around mid November HMRC fined British American Tobacco (BAT) £650,000 for oversupplying its products (fags) to Belgium.

Apparently this is the first time that HMRC has imposed a penalty on a firm for supplying to areas that are a "high risk" for smuggling. Cigarettes are significantly cheaper in Belgium, compared with retail prices in the UK, because of lower taxes. Thus, in HMRC's view, there is a risk that the cheap fags will be "re-imported" (smuggled) back into the UK (doubtless via Dover - either in a small boat or on ferry).

It is an interesting fine, given that BAT is not in the business of smuggling and is not paid to act as a law enforcement agency. However, an 8 year old amendment to the Tobacco Products Duties Act of 1979 entitles HMRC to impose a fine if a manufacturer is deemed to have failed in its duty not to facilitate smuggling. The maximum penalty is £5m.

Unsurprisingly, BAT said it was appealing against the "unjustified" fine.

The company was quoted by the BBC:

"We are a business not a law enforcement agency".

This is the first time a fine of this nature has been handed out by HMRC.

HMRC said at the time:

"The supply-chain legislation enables HMRC to work with industry to restrict the volume of genuine products available to smugglers.

Sanctions are a last resort and only applied where there is evidence that a manufacturer is failing to comply with its legal obligations."

By happenstance there have been a number of comments on this site recently touching on the issue of cigarette smuggling, and the possibility that some confiscated cigarettes have found their way back into the market place (Dover's pubs and corner shops etc) thanks to "security issues" within the warehouse in which the confiscated fags are stored (eg this thread).

I confess to knowing very little about the procedures relating to confiscated fags etc. However, a cursory glance on the net indicates that HMRC has a list of organisations that act as Customs agents and that there are organisations (eg Smartwater) that can provide "chemical tracers" that will identify items (such as cigarettes) that have illegally re emerged into the market from a secure warehouse.

I assume, if cigarettes have illegally re entered the market, there will be sufficient CCTV footage from the warehouse to identify those who took them. I also assume that those responsible will be apprehended and brought to trial.

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"

The Joy of Fags

The BBC reports that the Public Accounts Committee (PAC) has claimed that the UK economy lost £1.9bn a year through tobacco smuggling, equal to 20% of all tax collected on cigarettes.

Seemingly some tobacco firms oversupply other European countries, and the surplus then enters the UK tax-free.

However, PAC also claim that HMRC was "in the dark" about how effective its enforcement strategy was even though HMRC says that it has more than halved the size of the illicit market in cigarettes.

Given this "variance" in opinions as to what the true figures are, who are we to really believe?

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"

Booze Matters - HMRC Lose Tax Revenue

I am rather amused to read that MPs are up in arms at HMRC over its "soft" approach to prosecuting people for smuggling booze, and the loss in tax revenue from smuggled booze estimated at being £1.2BN per annum.

There is a touch of irony that those who receive taxpayer subsidised booze are complaining about the voters attempting to get their hands on their own form of "subsidised" booze.

Anyhoo, PAC have published a report today entitled "HM Revenue & Customs: Renewed Alcohol Strategy". Oddly enough it is dated 12th July 2012, the reasons for the delay in publication are not clear.

The report notes that there were no more than six successful prosecutions each year, in the four years to 2009-10.

However, Lin Homer has responded (as per the BBC):

"HMRC's performance in tackling alcohol fraud is measured by the combined impact of both civil and criminal proceedings on alcohol duty evasion - which increased significantly when the strategy was introduced.

Prosecutions are a strong deterrent and HMRC continues to investigate cases criminally where this will maximise impact on the fraud." 

Whilst the figure of £1.2BN lost per annum covers beer and spirits, there is no clear indication of the revenue lost from wine smuggling (much to the chagrin of PAC).

The report notes:

"The department does not make best use of intelligence and technology to detect and prevent alcohol duty evasion.

The department needs to work more closely with the industry to improve its understanding of legitimate export markets, and improve how it works with the UK Border Force to gather intelligence on illegal alcohol imports."

Here is an extract of the summary:

"In April 2010, HM Revenue & Customs (the Department) launched its renewed strategy to reduce the amount of tax lost each year due to alcohol duty evasion, principally through fraud which often involves exporting duty unpaid alcohol to the near continent, which is then redirected to the UK and released to the market with no duty paid. In 2010-11, the renewed strategy delivered £433 million in financial benefits against a target of £390 million.

The Department collected £9.5 billion of revenue from excise duties on alcohol in 2010-11. However, it estimates that there is a tax gap—the difference between taxes due and the amount actually collected—of up to £1.2 billion. The Department has not produced an estimate of the tax gap for wine, despite a commitment to our predecessors to do so. Without reliable information on the scale and nature of duty evasion for each category of alcohol (beer, wine and spirits) the Department cannot tailor its approach to target its efforts to tackle evasion to maximise value for money.

The Department does not yet have good enough information on the returns it secures from investing in specific areas of activity to make best use of the additional £917 million it plans to spend on reducing all kinds of tax avoidance and evasion. It told us that the rate of return on its work to reduce alcohol duty fraud is approximately £17 to £1 but it is not clear whether it could target its resources more effectively to secure a better return on its investment.

The Department is consulting on a range of measures to reduce alcohol duty fraud, including a proposal to introduce fiscal stamps for beer, an approach which appears to have been successful in reducing duty evasion on spirits. The Department does not yet have a full understanding of the costs and benefits of these proposals, including the compliance costs for the industry of introducing fiscal stamps for beer and the impact on legitimate wholesalers and retailers.

The Department does not make best use of intelligence and technology to detect and prevent alcohol duty evasion. The Department needs to work more closely with the industry to improve its understanding of legitimate export markets, and improve how it works with the UK Border Force to gather intelligence on illegal alcohol imports. In addition, the Department does not yet use the full capability of the Excise Movement Control System (EMCS), which facilitates the tracking of freight across the European Union, and could be used to target interventions and investigations more effectively. The Department implemented EMCS in phases over two years as planned, but did not make full use of its capabilities when implementation was completed.

Despite an estimated £1.2 billion being lost each year from duty evasion there are very few successful prosecutions for alcohol duties fraud. In the four years from 2006-07 to 2009-10 the highest number of successful prosecutions in any one year was six and the highest number of defendants was 16. The Department does not take enough account of the deterrent effect of successful prosecutions when considering the cost and benefits of
pursuing perpetrators through the courts."

Cheers!

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"

A Complete Farce!

Oops!

It seems that HMRC have made a bit of a "boo boo", and confiscated fags that they shouldn't have.

The Independent reports that fags seized from tobacco smugglers over the past eight years will have to be returned, because Customs officers unlawfully confiscated their assets.

HMRC are are re-examining approximately 4,000 cases, where confiscation orders were granted to seize the assets of people involved in fag smuggling.

HMRC may have to pay it all back, plus legal costs and compensation.

The law changed in 2001, only the masterminds and those who smuggled the fags have to pay the duty, unfortunately HMRC didn't spot the change in the law until last year.

HMRC face having to return up to £88M of tobacco smuggling assets, before costs and damages.

As Paul Holmes, Liberal Democrat home affairs spokesman, says it's "a complete farce".

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"

US To The Rescue

HMRC has admitted that it needs help from the US.

HMRC will hand over sensitive trade data to its American counterpart in return for access to a state-of-the-art fraud detection system, which is too expensive for HMRC to build itself.

HMRC has admitted that its techniques for analysing trade-based money laundering are sub-standard, and that it is necessary to use the US system in order "for HMRC to be effective".

American Immigration and Customs Enforcement (ICE) is ready to grant HMRC access to Dartts (Data Analysis and Research for Trade Transparency System), its anti-fraud system, in return for the "regular exchanging of trade data with them on UK-US import-export declarations".

Dartts searches for trade anomalies and financial irregularities, which could indicate money laundering, customs fraud, smuggling or tax evasion.

HMRC have also admitted that it "would need somewhere to hold large amounts of data and more analysts to process the data, which would be a difficult decision in the current climate".

Is it altogether wise to hand over so much data to the US authorities, given their propensity for arresting British businessmen who visit the US?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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 Goes Digital

It is reassuring to learn that HMRC are keen to use "cutting edge" technology in their fight against fraud.

HMRC have awarded a £60M 15 year contract to Airwave, to provide its law enforcement teams with digital communications.

The department's enforcement arm is charged with investigating and detecting crimes involving tax fraud, smuggling and related issues. The network will involve 4,000 devices and a central control room.

Stephen Walton, HMRC's manager for the project, is quoted:

"Security was always going to be a major factor when it came to choosing our radio network.

We were also keen to have a network that could provide coverage across as wide an area as possible."

Nice to see that security is a major concern of HMRC.

Now remind me again, were those missing data discs encrypted?

How did they send those data discs?

The digital system will also allow HMRC officers to communicate with police, the fire service and port authorities.

Airwave says its network provides coverage of 99% of Great Britain.

However, there is one small problem with this new system.

Computing reported in 2006 that the network will last only a few hours in the event of a mains power blackout caused by accidents, freak weather or terrorist attacks.

Not so "cutting edge" after all then!

Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com) is brought to you by www.kenfrost.com "The Living Brand"

Sauce For The Goose

This being the season of goodwill to all, it is refereshing to see that the HMRC is being served a generous portion of sauce for both the goose and the gander.

Dave Partridge, the Chief Operating officer from the Revenue and Customs prosecutions office, has been fired following concerns that his wife had been employed by the department as a consultant.

Partridge had his contract terminated in August after an inquiry into the employment of his wife, Michaela.

Britain, being such and open democracy, is only now learning of the story as a result of questions being asked in parliament. Richard Bacon, a Conservative member of the House of Commons public accounts committee (PAC), said that Mrs Partridge or her company had been paid £97,907 since her husband was appointed in September 2005.

The RCPO is in charge of prosecuting tax fraud and other major criminal cases, including drug smuggling and money laundering.

Bacon has called for MPs to investigate the RCPO accounts, and to look into propriety at HM Revenue and Customs after new figures suggested that the department was responsible for almost half of the fraud committed across all government departments.

It seems that 190 cases of fraud were reported in HMRC in the last financial year. They were worth more than £1.75m, 45.4% of the value of all departmental fraud.

Kind of ironic isn't it?

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