Tax Abuse And Insolvency

Tax Abuse And Insolvency

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.

46 Years For £120million Booze Fraud Gang

46 Years For £120million Booze Fraud Gang

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.

Golfing Tobacco Smuggler Putt In Jail

Golfing Tobacco Smuggler Putt In Jail

A keen golfer who enjoyed playing golf in exotic locations by dodging tax on smuggled tobacco has been jailed.

Dhanji Varsani, 56,  North West London, shipped in nearly 7000kg of hand-rolling tobacco worth £1.2 million in unpaid excise duty, an investigation by HM Revenue and Customs (HMRC) revealed.

The tobacco arrived in a trailer on a container ship into Purfleet in Essex, hidden in a shipment of pocket tissues, was traced to a storage company, IFL Sea & Air in Southall, West London and to Varsani.

Varsani claimed to be unemployed, but lived a lifestyle of driving high-powered vehicles, playing at top golf courses and enjoying holidays in places like Dubai.

Varsani pleaded guilty to evading excise duty at Harrow Crown Court on 6 November 2018 and was sentenced on 11 January, 2019 to three years and 10 months in jail.

Callous Fraudsters Jailed for £60million HIV Cure Scam

Callous Fraudsters Jailed for £60million HIV Cure Scam

Two Fraudsters have been jailed for a total of 14 and a half years after using HIV research to try and steal £60million through a fraudulent tax avoidance scheme.

Antony Blake, 68, and John Banyard, 70, used their company, Ethical Trading and Marketing Ltd, attract wealthy investors with the promise of avoiding tax by supporting tree planting in the Amazon and research for a HIV cure.

World-renowned conservation scientist, Professor Ian Swingland, 72, authenticated fake documents and added credibility to the scheme.

Fake scientific reports and photos were used to claim fraudulent expenses, which was submitted to the HMRC, but no evidence showed this to be true.

Investors were able to claim tax rebates on the losses that the businesses apparently generated, or lower their tax bills, by offsetting losses against £160 million of income, attempting to avoid £60 million in tax. The majority of repayments claimed were withheld by HMRC.

On 3 March 2017, the men were found guilty, after a trial at Southwark Crown Court that began in September 2016. Antony Blakey was jailed for seven and a half years on 10 March 2017; revised to nine years at the Court of Appeal on 25 May 2017. John Banyard was jailed for four and a half years; revised to five and a half years at the Court of Appeal, on the same dates. Professor Ian Swingland was sentenced to a two year sentence, suspended for 18 months.

HMRC withdraw Tax Tribunal Case against Churchill Tax Advisers’ client

HMRC withdraw Tax Tribunal Case against Churchill Tax Advisers’ client

This case came to us several years ago from another firm of accountants. It involved a take away/ restaurant being under investigation by HMRC’s VAT team and assessments being raised. We challenged the assessments as being unreasonable putting forward our strong technical arguments. Unfortunately, HMRC inspector was not willing to accept and we had to appeal to the Tribunal. Shortly before the Tribunal hearing and whilst exchanging statement of case, HMRC’s litigation office wrote to us to state that they will be settling the appeal by agreement. We are grateful to the HMRC’s Solicitor’s Office for having critically reviewed the case before the hearing and deciding that it was not worth pursuing. This victory was great news for our client who had been under stress for a long period. Please click here to view HMRC’s letter settling the Tribunal case by agreement.

Our analysis: This was an interesting case where HMRC had taken a strong stance on their technical position. We have come across a number of such cases previously and have experienced that either the client or their accountant give in to HMRC’s position to avoid going to Tribunal. We have written on numerous occasions previously that just because an HMRC’s inspector takes a particular view does not mean it is necessarily correct according to the legislation and case law. In this case, our technical arguments were very strong but the HMRC caseworker was not willing to consider. Finally prior to the hearing at the Tribunal when the case was reviewed by HMRC’s litigation office, they accepted our position and settled by agreement. This case once again demonstrates the importance of seeking specialist advice from a reputed firm when under a tax investigation.

Tax Investigation Closed Through Contractual Disclosure Facility (CDF)

This client came to us from Derbyshire and was already under a tax investigation for failing to disclose income. We considered the merits of the case and suggested that a full disclosure under Contractual Disclosure Facility (CDF) would be the most effective way to conclude matters in contrast to a lengthy exchange of correspondence with HMRC inspector resulting in tax and high professional fees.  The proposal was put forward to HMRC inspectors and they agreed to receiving a CDF. A full CDF submission was prepared and submitted which was fully accepted by HMRC. The tax and penalties payable as a result were quite minimal compared to what had initially been estimated. We are grateful to HMRC officers involved for their cooperation and support. Please click hereto view HMRC’s acceptance of the CDF and conclusion of the matter. 

Our analysis: This was an interesting case where our firm and HMRC worked in cooperation to bring an early and effective closure to a tax investigation. Had the conventional route of entering into prolonged correspondence and dispute been entered, this would have taken significantly longer and cost the client more in professional costs, tax and penalties etc. Although the CDF route may not be applicable in all circumstances but it is very useful to be able to identify the right strategy when approaching a tax investigation.