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The client accepted the advice to abandon the remuneration planning but was naturally keen to minimise the settlement amount. Crowe obtained HMRC’s agreement to only recover liabilities under normal time limits, and grant all available offsets under the MSC legislation, despite some claims being arguably time barred, which was critical to achieving a lower settlement.
HMRC’s Fraud Investigation Service (FIS) officers were persuaded to attend an in-person meeting with Crowe and the Finance Director and Managing Director of the group; this ensured HMRC’s satisfaction that the client had followed professional, albeit incorrect, advice, hence it was reasonable to apply normal time limits and no penalties.
A detailed calculation including all appropriate offsets was agreed with FIS after they had taken technical advice, and a final settlement of £1.1 million was achieved within eight months of the client’s first contact with Crowe.
Our client had completely overlooked an investment portfolio for many years on her annual tax returns. The account was set up by her parents for our client’s benefit, although our client had always considered the account to belong to her children. We liaised with the investment manager who confirmed our client was in fact the sole legal and beneficial owner. We therefore recommended that our client register for the Voluntary Disclosure Opportunity and sought to restrict the disclosure period and penalties charged. HMRC accepted the disclosure quickly and our client was thrilled.
Our client contacted us following an HMRC letter regarding ‘naming and shaming’ in relation to a deliberate penalty for missing a large capital gain from his tax return.
His previous accountant dealt with the enquiry and agreed the tax due. HMRC issued a deliberate penalty, which was not disputed and our client simply paid it. However, since he did not receive maximum reductions for “telling/helping/giving”, HMRC wrote to him stating his details could be published as a deliberate defaulter. Our client was concerned about reputational damage, hence he asked Crowe what could be done. We reviewed the historic papers and our client’s circumstances and noted that he had an accident in which he severely damaged his spine. He was therefore in significant pain, which was in turn detrimental to his mental health. We found evidence that the client tried to be helpful throughout the enquiry process, although this was hindered by the cocktail of prescription drugs which caused him issues with cognitive function. We discussed with our client the possibility of making a late appeal in respect of the quantum of the penalty, but he wanted to draw a line under this and simply focus on ensuring his details would not be published. We obtained medical records from our client’s doctors and made comprehensive representations to HMRC about the extenuating circumstances and damage ‘naming and shaming’ would have on his already fragile mental health.
HMRC agreed not to publish our client’s details and our client was extremely relieved, stating: “That's such wonderful news we can't thank you enough, to be honest you guys are amazing.”
An individual who had deliberately failed to declare consultancy fees as well as operate PAYE on his housekeeper’s salary sought Crowe’s advice. Our client was an accountant, hence rightfully concerned that HMRC might seek to prosecute him for tax fraud. We recommended he make a request to participate in the Contractual Disclosure Facility in order to secure immunity from prosecution. Given the specific nature of the issues, Crowe managed to agree with HMRC that it would not be necessary to complete a full blown CDF report, which significantly reduced the amount of time and cost involved in reaching settlement with HMRC.
We were contacted by an individual who received an enquiry notice into a recent tax return. We noted that HMRC were asking some very specific questions indicative of there being suspicions that larger problems existed. While our client was initially reluctant to discuss the wider issues, we convinced him that it was in his best interests to make a full disclosure, not least because we had analysed publicly available data that pointed towards numerous issues which HMRC would of course already be aware of. The client has since informed us there are numerous inaccuracies, which result in tax liabilities in excess of £1.5 million. We have therefore registered the client for the Contractual Disclosure Facility in order to protect him from prosecution. Furthermore, the act of making a full disclosure will ultimately reduce our client’s exposure to penalties.
We were approached by our client’s accountants who were dealing with enquiries into the company returns as well as his own personal returns. The accountants identified transactions which had not been dealt with correctly, whereby ‘commissions’ had been routed through our client’s personal bank accounts; the accountants’ initial thoughts were that our client would owe HMRC in excess of £1 million of tax.
We met with the client and discussed the issues which involved deliberate conduct. We advised him to request the Contractual Disclosure Facility (CDF), because the level of monies diverted to him personally were significant and he was at risk of being prosecuted. There were also errors within the company accounts, although we successfully agreed with HMRC these were careless errors. The enquiries had been ongoing for a number of years by the time we got involved and our client was anxious to resolve matters with HMRC as soon as possible so he could concentrate on running his business, which was struggling due to the pandemic. We were able to deal with all outstanding issues via the CDF, secure the minimum penalty available and agree a time to pay arrangement, which was enormously helpful to our client. The final tax settlement was £214,000.
Our client received a nudge letter from HMRC. Her elderly mother lived in Hong Kong and had made huge amounts of money from property there. Her daughter’s name had been included on investments and property registers after the sad loss of her father. This was, of course, a protective measure for when the mother died. The beneficial ownership at all times remained with the mother and the daughter had only a legal interest. The position was explained to HMRC and a nil settlement was agreed.
Our client contacted us upon receipt of a ‘nudge’ letter from HMRC in respect of undeclared foreign income. The client advised that he holds rental property in his native Germany, which is fully declared to the German authorities but he had no awareness that he would also need to declare this in the UK.
The client had not acquired a UK domicile of choice. We reviewed the client’s behaviour and established that he had a reasonable excuse for both failing to notify his chargeability to HMRC and for failing to correct his offshore tax position. We successfully argued this, resulting in a settlement for just four years of liabilities and no penalties, which would otherwise have been at least 150% of the tax due.
The case was complicated by the fact that our client suffered from both physical and significant mental health issues. His mental health in particular meant that the entire process was, at times, completely overwhelming to him. Like many clients, the uncertainty of how to navigate a disclosure and HMRC’s likely actions caused considerable concern.
Our UK resident clients had received a distribution from an overseas Trust upon its cessation. The Trust was set up by their father many years ago when he was living overseas and there were other beneficiaries who lived overseas. HMRC wrote to our UK resident clients to ask if they needed to disclose any foreign income, gains or assets as a result of the distribution.
We reviewed the background in detail and concluded that our clients received mainly capital from the Trust upon cessation, meaning their liabilities were in fact much lower than originally anticipated. We presented our technical analysis and explanation to HMRC and a small sum was offered in relation to the minor taxable element, which HMRC accepted without challenge.
A company had been under scrutiny by HMRC for several years, with allegations of fraud and threats of large assessments and penalties. No self-assessment enquiries had been opened. The directors tried to deal with matters themselves and, in a misguided attempt to be helpful, delved into historic data for HMRC. That data was sparse and HMRC sought to take advantage of that and asserted a seven-figure liability had arisen. At this stage, the company took [other] professional advice which was to use HMRC’s figures as a basis and to chip away at them.
Crowe was later appointed and took the view that the correct starting point was not HMRC’s figure but that no additional tax should be due in the absence of a properly evidenced discovery position. HMRC’s multi-million-pound assessments were appealed, and the matter passed for statutory review. Detailed representations were submitted regarding HMRC’s discovery powers and the technical position. The reviewer agreed with us and significantly reduced the assessments. The final result of £13,366 tax was accepted on a commercial basis rather than incur the costs of a tribunal.
Our client was contacted by the Fraud Investigation Service boldly stating that they had evidence to suggest historic tax irregularities. No enquiry was open nor was any Code of Practice issued but HMRC stated that their investigation was without limitation, covering all businesses, all sources of income and gains, and all taxes for all time. HMRC did not seem to have a properly supportable discovery position but appeared to be searching for one.
The client satisfied us that there was nothing to disclose. While remaining cooperative, collaborative and professional throughout, we provided a robust buffer between HMRC and the client, ensuring that rights and safeguards were observed and that powers were not abused. We also challenged HMRC on the nature and relevance of the evidence allegedly held. The more we pressed HMRC and explored the facts, the more it became apparent that their evidence was poor and unreliable. HMRC initially tried to continue to explore our client’s financial history but ultimately closed the investigation with no assessments and no further tax due.
HMRC’s nudge letter campaign has resulted in numerous individuals and accountants getting in touch with Crowe for advice and support regarding how to make a full disclosure in respect of foreign income and gains. We have helped our clients navigate the complex rules in respect of how many years are assessable and what penalty rates will be applied.
We have also helped our clients ensure that a full disclosure is being made to HMRC in order to reduce the risk of follow up questions. One of the most important factors we have helped our clients with is determining whether there is a reasonable excuse for failing to correct their historic tax position before 30 September 2018, otherwise penalties ranging between 100-200% of the lost tax become due.
A large organisation approached Crowe’s Employer Advisory Group (EAG) to discuss potential errors in respect of claims made via the Coronavirus Job Retention Scheme (CJRS).
The rules are extremely complicated and so there are numerous pitfalls which can reduce an employer’s entitlement to the funds. Our EAG colleagues identified a number of issues and worked closely with Tax Resolutions to make a disclosure to HMRC.
Great care was taken to provide explanations about why the mistakes arose in order to protect our client from the high penalties that can apply. We know from the recent budget that additional funding and HMRC officers will be made available to scrutinise and challenge claims made under the CJRS and the Self-Employment Income Support Scheme. We therefore recommend that professional advice is taken at the earliest opportunity.
In the final episode of our Tax Resolutions podcast series, Hayley Ives and John Cassidy talk us through ‘furlough fraud’ that has become apparent under the COVID-19 government support schemes. They focus on the complexities of the furlough fraud scheme, what happens when errors are uncovered and how the government are going about recouping wrongly claimed payments.
In this episode of our Tax Resolutions podcast series, Sean Wakeman and Hayley Ives give us a detailed summary of Financial Institution Notices (FIN). They discuss whether the concept of FIN is similar to third-party data requests, whether a financial institution can resist a notice and if concern has been expressed about HMRC’s enhanced powers. They also touch on the adverse effects this could have on taxpayers and why the notices need to be treated with care.
In the next episode, Mark Ayre, Director and John Cassidy, Partner in our Tax Resolutions team talk us through some of the common myths surrounding #HMRC enquiries and highlight some key points that you should be on the lookout for. They also discuss what issues arise when moving towards the completion of an enquiry.
In the next episode of our Tax Resolutions podcast series, Sean Wakeman, Partner, and Mark Ayre, Director, give us an overview of the Code of Practice 8 (COP8), explaining how it differs to a local tax office enquiry and what specific issues would usually come under the COP8.
In the next episode of our Tax Resolutions podcast series, Sean Wakeman, Partner, and Mark Ayre, Director, discuss the Code of Practice 9 (COP9) and the ins and outs of the process. They cover how long an individual has to act on a COP9 letter, whether they are inclined to accept it and if going through the COP9 process makes an individual immune from prosecution.
In this episode of our Tax Resolutions podcast series, Sean Wakeman, Partner, and Ian Shirley, Director, talk us through what the Let Property Campaign (LPC) is, who the facility is available to and how penalties under the facility work. They also discuss the advantages and disadvantages of using the LPC and if it is the right route for deliberate cases.
In this episode, Mark Ayre and Ian Shirley, Directors in our Tax Resolutions team give us an overview of what the Worldwide Disclosure Facility (WDF) is, how to go about making a disclosure and who qualifies to use it. They also discuss the best way to reduce a penalty and whether those with deliberate or fraudulent cases should still use the WDF.
John Cassidy, Partner and Hayley Ives, Director discuss time limits for HMRC to raise investigations. They cover the different time limits and categories for HMRC to raise assessments, the new rules for assessment windows in connection with offshore matters and explore the question of if additional tax is assessable, will this lead to a penalty?
In the first podcast of the series, Ian Shirley, Director and John Cassidy, Partner in our Tax Resolutions team cover the concept of ‘reasonable excuse’. They discuss what reasonable excuse is, why it is important to know whether your client did or did not have one and what HMRC’s stance is on reasonable excuse arguments. The team also share examples of where Crowe have recently argued reasonable excuse.
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