Furlough Fraud

Furlough Fraud

Jul 28, 2020 | HMRC, Tax Investigation | 0 comments

CJRS (Coronavirus Job Retention Scheme) and SEISS (Self-Employment Income Support Scheme) grants knowingly misused can be a charged as a criminal offence. If HMRC open an enquiry and do not prosecute, the Officers can pursue penalties up to 100% of the tax due. The tax due = 100% of the incorrect grant payments made. HMRC should be more lenient if there is a genuine mistake it is therefore important to obtain professional advice if there is an investigation or to make a voluntary disclosure of any errors before HMRC open an enquiry. HMRC made the first criminal CJRS fraud arrest in July and with over 4,000 reports from employees many employers could be caught up in an investigation. 

Following Royal Assent on 22 July, businesses have 90 days to come forward to make a voluntary disclosure to HMRC of any errors. The deadline for payments already received will expire on 20 October.

Furlough fraud and SEISS recovery – HMRC’s COVID-19 clawback!!

Furlough fraud and SEISS recovery – HMRC’s COVID-19 clawback!!

Jul 6, 2020 | HMRC, Tax Investigation | 0 comments

If you have made a mistake, or an intentional incorrect claim, then now is the time to disclose and make it right with HMRC.

Last month HMRC issued a new draft legislation which will allow HMRC to impose penalties up to 100% of the amounts overclaimed.  This is in addition to taxing the incorrect claims at 100% tax.  There will be a 30-day window in which any problems can be disclosed to HMRC.  This 30-days starts ticking form the later of Royal Assent of the Finance Bill (expected during July) or after receipt of the incorrect payment from the HMRC.

The press has reported that at least 4,000 reports have been sent to HMRC about employers making incorrect furlough claims.  This could include working when furloughed, not being paid the full amount or even fake employees.

Please contact us if you or your clients need to make a disclosure or if HMRC open an investigation.  In the most serious cases, HMRC could launch a criminal prosecution enquiry.

Three men arrested after 8 million cigarettes are seized

Three men arrested after 8 million cigarettes are seized

Jul 6, 2020 | HMRC, Tax Investigation | 0 comments

Eight million suspected illicit cigarettes are seized and three men, 34, 37, and 55 have been arrested during a Joint Agency Task Force (JATF) operation in Co Armagh.

Officers from HM Revenue and Customs (HMRC) attended a property in Newry this morning and made the arrests at the scene and seized eight million cigarettes.  HMRC suspected the cigarettes are worth an estimated £3m in lost duty and taxes.

Some confiscations were also made including a heavy goods vehicle and its refrigerated unit, a van, a forklift truck and approximately £12,000 and €2,000.

More searches were made and almost €100,000 euros, thousands of duty stamps and approximately two and a half tonnes of hand-rolling tobacco being confiscated.

Investigations are ongoing.

Hashmi

Jul 6, 2020 | Capital Gains Tax Advice, HMRC, Tax Investigation | 0 comments

The case of Hashmi related to the private residence relief regarding capital gains tax.  The case was lost in the First-Tier Tribunal Tax because the Appellant had tried to claim the PRR on three properties that had been sold on fairly quickly after purchase.  The tribunal found that they had not seen anything that suggested sufficient evidence so show, some degree of permanence, some degree of continuity or some expectation of continuity in the property and show that the person claiming the relief had lived in the property.

This is very important for the relief to be claimed.  To be able to demonstrate that the property had been a home.  Evidence such as utility bills and TV licences are all the kinds of evidence that demonstrate permanence and continuity, as the court required in this case. 

Nicholas & Charlotte Sandham t/a Premier Metals Leeds [2020]

Jul 6, 2020 | HMRC, Tax Investigation | 0 comments

Nicholas & Charlotte Sandham t/a Premier Metals Leeds [2020] related to an appeal where a scrap-metal partnership was denied input tax recovery because an agent under their instruction was found to have known that transactions entered into by the partnership under the control of the agent were known to have been connected to fraud.  The partnership was exonerated during the Tribunal, but the agent was deemed to have known that the transactions were connected to fraud.

Although the partners were blameless in this case, the knowledge attributed by the court to the agent was enough for the Kittel principle to apply. In many ways, this judgment is a warning to everybody that if you are trading without sufficient due diligence, then there is every chance that HMRC will apply the principle and you will either face assessments for additional output tax or more likely lose your right to deduct input tax in relation to the relevant transactions. This type of action will materially affect margins and potentially have a catastrophic effect on the bottom line.

R(aoa JJ Management Consulting LL and others) v HMRC

Jul 6, 2020 | HMRC, Tax Investigation | 0 comments

This case relates to the Court of Appeal rejecting a challenge to HMRC’s ability to use informal investigatory powers to require a taxpayer to voluntarily provide information.

 

The Appellant is a UK domiciled taxpayer using corporate vehicles to run a chain of supermarkets in Spain and Portugal. In June 2016 HMRC sent a letter to the taxpayer to say that they had information suggesting there were irregularities in the taxpayer’s affairs that related to income tax, capital gains tax, corporation tax and VAT. The enquiries were wide-ranging and the taxpayer had cooperated but HMRC kept coming back for more information.

 

The taxpayer had attempted a Judicial Review in which he had claimed that HMRC’s actions were unlawful, as the investigation was not conducted under s.9A of Taxes Management Act 1970 or s.36 of Finance Act 2008. The Judicial Review was not successful as the High Court made clear that S9 (1) of the Commissioners of Revenue and Customs Act 2005 gave HMRC ancillary powers to do anything “they think is necessary……. The exercise of their functions”.

 

The result of the decision is that it is established that HMRC’s powers are wide-ranging, both formally and informally. The voluntary nature of requests it is hoped will engender a spirit of cooperation in the investigation, but if the taxpayer believes that the enquiry is excessive or overly intrusive then they can withdraw cooperation. This will then see HMRC use their formal powers, time limits permitting.