Tax Abuse And Insolvency

Tax Abuse And Insolvency

May 27, 2020 | HMRC, Tax Advice, Tax Enquiry, Tax Investigation, Tax planning | 0 comments

HMRC are currently awaiting the passing by Parliament of the latest Finance Act, which will give them a new weapon in their fight against tax abuse arising from insolvencies. 

HMRC have regarded for some time that insolvency laws are open to abuse and that this abuse has led to the loss of tax, whether it be VAT, corporation tax or PAYE. The Finance Act will now give HMRC powers to make directors and shareholders jointly and severally liable for outstanding tax liabilities. 

Thy will identify those in a company who have facilitated the tax loss. Be it someone who evades tax or facilitates tax avoidance, such as disguised remuneration schemes. 

Where HMRC believe an insolvency or the preparations for an insolvency have taken place to allow a company to avoid its tax liabilities, then HMRC can use their powers to make individuals personally responsible for the tax that the company owes. 

It should be stressed that the new regulations are aimed at what HMRC regard as serial offenders who have been involved in at least one prior insolvency where there were significant amounts of tax not collected due to the insolvency. 

If you are considering an insolvency at this time, especially due to the effects of Covid-19, please seek advice at the earliest opportunity. We here at Churchill Tax Advisers can advise you of the course of action you should take. Please call our dedicated number.

Rank Group

Rank Group

May 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

The Rank Group had attempted to recover excessive output tax declared and paid to HMRC in relation to Bingo sales, which had been incorrectly standard rated since the inception of VAT, forty-seven years ago. Most of the claims had been accepted and repaid by HMRC except for one claim that was outside the four year time limit. The Court of Appeal supported HMRC’s position despite legal argument by the Rank Group that the four year time limit for making such claims could be breached by using the Birmingham Hippodrome [2014] BVC 27 decision in which HMRC disregarded the four year cap. Rank argued that HMRC could assess it for input tax overclaimed in the period covered by the rejected claim, and therefore its overpaid output tax should be set off and its claim for the period (£67.05m) repaid. By finding for HMRC the Court of Appeal confirmed that rejecting the claim was legal.
Union Castle Mail Steamship Company

Union Castle Mail Steamship Company

May 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

The Court of Appeal ruled on closure notices that had disallowed deductions in corporation tax. The deductions related to administrative matters in relation to derivatives contracts. The Court of Appeal agreed with the lower courts that these type of costs were not the same as losses affecting the value of the contracts and that therefore it was not correct to regard the costs as diminishing the overall value of the derivatives contracts and therefore no deductions were appropriate in relation to corporation tax.

Royal Opera House

Royal Opera House

May 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases, Tax Advice | 0 comments

The Royal Opera House is a partially exempt trader who tried to make its overall input tax recovery including the costs of putting on productions attributable to the taxable supplies it makes. These are essentially catering and hospitality supplies made before and during productions. The Upper Tier Tribunal refused the link as they regarded the supply of the exempt production as the primary purpose of the opera House. Therefore, the production costs remained non-recoverable under partial exemption regulations.

 

For anybody operating a partial exemption method, expenditure must be correctly identified for the purposes of recovery of tax.

46 Years For £120million Booze Fraud Gang

46 Years For £120million Booze Fraud Gang

May 27, 2020 | HMRC, Tax Investigation, VAT Fraud | 0 comments

A gang from Berkshire that stole £34 million in VAT and laundered £87 million after selling illicit alcohol have been jailed for more than 46 years.

Gang leaders Jayesh Shah, Riaz Khan, Fiaz Raja and Muhammad Rasool, orchestrated a  VAT fraud. Gang members then laundered the stolen tax and the proceeds from selling illicit alcohol.

The group created paperwork detailing fictitious transactions, which were used as a cover for the sale of smuggled alcohol.

Evidence showed £87m was laundered through more than 50 bank accounts in Britain, Cyprus, Hong Kong, Dubai and other foreign countries. 

Shah, 52, of Wembley, Khan, 49, of Windsor, plus Raja, 51, and Rasool, 38, both of Slough, headed the gang who laundered the proceeds of illicit alcohol importations using companies under their control. The fraud was carried out over two years between January 2013 and 2015. 

The investigation team dismantled the complex operation after executing more than 20 warrants in January 2015 across London, Berkshire, Surrey, East Sussex and Buckinghamshire, seizing computers, £370,000 cash and business records.

Confiscation proceedings against the group are now underway.