My current case load includes representing individuals and companies facing an assortment of accusations from VAT and income tax evasion to ‘dumping tax’ avoidance and money laundering. I primarily defend those who face allegations concerning unpaid tax in the UK. However, in recent years there has been a surge in investigations and prosecutions brought by foreign tax authorities against UK based clients, largely due to improved cooperation between the UK and other jurisdictions, a willingness to share information and to assist in enforcement action. I suspect this trend will continue despite Brexit.
If you could make one change to tax, what would it be?
One of the huge frustrations is the length of time an investigation by HMRC in the UK can take. I am currently representing clients who have been ‘under investigation’ for several years, waiting in limbo for a decision on whether they will be charged and face trial. This is bad for both the concerned client (who, contrary to popular belief, is often not guilty) and for HMRC as an elongated investigation can turn stale as staff move on and key witnesses’ memories fade. The primary reason for delay is often a lack of resources and direction by HMRC and/or the CPS who prosecute on its behalf. Aside from injecting a huge amount of cash into the creaking criminal justice system, a solution to avoid these cases mothballing would be for the parties to consider negotiating a civil settlement or a contractual disclosure agreement as an alternative to prosecution. My experience, however, is that there is a reluctance by HMRC to revert back to the ‘civil route’ once a criminal investigation has formally started, despite the practical benefits in reaching a financial settlement to all concerned. Whilst the desire to demonstrate a strong deterrent message to would-be tax evaders is laudable, slow justice is no justice.
Are there any new rules causing a particular problem?
The Criminal Finances Act 2017 brought into force the corporate offence of failure to prevent the facilitation of tax evasion. For the first time, HMRC is allowed to investigate and prosecute a company or partnership for failing to prevent its employees and other ‘associated persons’ from facilitating tax evasion in the UK and abroad.
Two years on (and following a freedom of information request made by my firm in October 2019), it is surprising that there have been zero prosecutions to date under this legislation. Despite HMRC confirming that a number of investigations are in the pipeline, none have been made public and we do not know when and if any charging decisions will be made. HMRC will need to prosecute under this much heralded legislation in 2020 to avoid facing a political backlash.
What should we look out for in 2020?
Assuming HMRC officers are freed up to focus on investigating and prosecuting criminal cases (and not just focusing on Brexit), I predict a flurry of activity as HMRC attempts to live up to the many pledges in its 2015–2020 business plan. This included a promise to invest £800m into additional work to tackle evasion and non-compliance in the tax system, with a clear goal to raise an additional £5bn a year by 2019 to 2020. In order to reach this target, HMRC pledged to prosecute 100 wealthy individuals and corporates per year by 2020.
My concern is that 2020 will see a rush to hit targets and to avoid criticism from the likes of the PAC. However, a scatter gun approach by HMRC and the CPS may well result in the wrong individuals and companies being investigated and charged with criminal offences. This will benefit no one if such cases collapse at trial due to failures to properly investigate or because of a lack of evidence.
And finally, you might not know this about me but...
My New Year’s resolution (aside from securing justice for all my clients) is to beat my current personal best for a 5K park run by over two minutes. I am not disclosing what my current personal best is.
My current case load includes representing individuals and companies facing an assortment of accusations from VAT and income tax evasion to ‘dumping tax’ avoidance and money laundering. I primarily defend those who face allegations concerning unpaid tax in the UK. However, in recent years there has been a surge in investigations and prosecutions brought by foreign tax authorities against UK based clients, largely due to improved cooperation between the UK and other jurisdictions, a willingness to share information and to assist in enforcement action. I suspect this trend will continue despite Brexit.
If you could make one change to tax, what would it be?
One of the huge frustrations is the length of time an investigation by HMRC in the UK can take. I am currently representing clients who have been ‘under investigation’ for several years, waiting in limbo for a decision on whether they will be charged and face trial. This is bad for both the concerned client (who, contrary to popular belief, is often not guilty) and for HMRC as an elongated investigation can turn stale as staff move on and key witnesses’ memories fade. The primary reason for delay is often a lack of resources and direction by HMRC and/or the CPS who prosecute on its behalf. Aside from injecting a huge amount of cash into the creaking criminal justice system, a solution to avoid these cases mothballing would be for the parties to consider negotiating a civil settlement or a contractual disclosure agreement as an alternative to prosecution. My experience, however, is that there is a reluctance by HMRC to revert back to the ‘civil route’ once a criminal investigation has formally started, despite the practical benefits in reaching a financial settlement to all concerned. Whilst the desire to demonstrate a strong deterrent message to would-be tax evaders is laudable, slow justice is no justice.
Are there any new rules causing a particular problem?
The Criminal Finances Act 2017 brought into force the corporate offence of failure to prevent the facilitation of tax evasion. For the first time, HMRC is allowed to investigate and prosecute a company or partnership for failing to prevent its employees and other ‘associated persons’ from facilitating tax evasion in the UK and abroad.
Two years on (and following a freedom of information request made by my firm in October 2019), it is surprising that there have been zero prosecutions to date under this legislation. Despite HMRC confirming that a number of investigations are in the pipeline, none have been made public and we do not know when and if any charging decisions will be made. HMRC will need to prosecute under this much heralded legislation in 2020 to avoid facing a political backlash.
What should we look out for in 2020?
Assuming HMRC officers are freed up to focus on investigating and prosecuting criminal cases (and not just focusing on Brexit), I predict a flurry of activity as HMRC attempts to live up to the many pledges in its 2015–2020 business plan. This included a promise to invest £800m into additional work to tackle evasion and non-compliance in the tax system, with a clear goal to raise an additional £5bn a year by 2019 to 2020. In order to reach this target, HMRC pledged to prosecute 100 wealthy individuals and corporates per year by 2020.
My concern is that 2020 will see a rush to hit targets and to avoid criticism from the likes of the PAC. However, a scatter gun approach by HMRC and the CPS may well result in the wrong individuals and companies being investigated and charged with criminal offences. This will benefit no one if such cases collapse at trial due to failures to properly investigate or because of a lack of evidence.
And finally, you might not know this about me but...
My New Year’s resolution (aside from securing justice for all my clients) is to beat my current personal best for a 5K park run by over two minutes. I am not disclosing what my current personal best is.
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.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")