Tax Disputes & Investigations
Tax Dispute & Tax Investigation Case StudiesCampaigns – Liechtenstein Disclosure Facility Source: Direct (by recommendation) OneE TDI were directly approached by the holder of a HSBC Bank account in Switzerland. The client had been made aware that data relating to UK resident account holders had been stolen from HSBC and passed to HMRC. The client had deliberately failed to declare the offshore HSBC funds to HMRC and compounded matters by omitting income/gains connected to the undeclared funds. The client was at risk of either prosecution or a significant financial penalty for non-disclosure. Solution: OneE TDI successfully argued that the case should be registered for the Liechtenstein Disclosure Facility. This secured the client immunity from prosecution. OneE TDI then prepared a report detailing the errors and omissions made, which was ultimately accepted by HMRC. A number of complex technical issues were also argued and settled in favour of the client. The potential tax and interest that could have been charged was minimised and our representations secured the best available settlement terms for the client. [Top] Campaigns – Liechtenstein Disclosure Facility Source: Issues: OneE TDI were instructed by solicitors acting for a High Net Worth Individual who was being criminally investigated by a regulatory authority for suspected non-tax offences. His UK tax affairs were incorrect. There was also the serious risk of prosecution by HMRC or, if the case was dealt with on a civil basis, the financial penalties potentially faced were significant. Solution: Despite the ongoing criminal investigation, OneE TDI successfully argued that the client could register for the Liechtenstein Disclosure Facility (LDF). The terms secured under the LDF were such that tax and interest for ten years of assessment were effectively reduced to NIL and a 10% penalty was secured. [Top] Specialist Investigations - Code of Practice 8 investigation Source: Issues: OneE TDI were initially asked to become involved when specialist advice on issues identified as part of a routine Compliance Check. The client had sought to protect his world-wide asset position by transferring ownership into a complex offshore structure. Significant levels of income that should have been returned in the UK had not been included on the client's Tax Returns. There was a risk of prosecution by HMRC or, if the case continued to be dealt with on a civil basis, the financial penalties potentially faced by the client were significant. Solution: OneE TDI approached HMRC Specialist Investigations and successfully argued that the case should be registered for Code of Practice 8 investigation. There was no deliberate attempt to defraud HMRC. This secured immunity from prosecution and OneE TDI then prepared an extensive disclosure report detailing the errors and omissions made. [Top] Specialist Investigations - Code of Practice 9 investigation [Top] Civil Investigation of Fraud - Code of Practice 9 investigation Working with Accountants OneE TDI were initially instructed by accountants acting for a client under a Compliance Check – Income Tax enquiry. Through the course of the enquiry the accountant came to have serious concerns about the validity of the rental income declared by his client and some of the business expenses claimed. The accountant was concerned that if his suspicions were correct and were discovered by HMRC there was a serious risk of prosecution. Specialist advice was needed. OneE TDI approached HMRC's Civil Investigation of Fraud team and successfully argued that the case should be registered for Code of Practice 9 investigation. This secured the client immunity from prosecution. OneE TDI then prepared an extensive disclosure report detailing the errors and omissions made, which was ultimately accepted by HMRC. A number of complex technical issues were also argued and settled in favour of the client. The potential tax and interest that could have been charged was minimised and our representations secured a 20% penalty (far lower than would normally be the case). [Top] Charity, Assets & Residence investigations Direct (by recommendation) OneE TDI were directly approached by a High Net Worth Individual who was subject to a Charity, Assets & Residence investigation. HMRC suspected that not all his worldwide income/gains had been declared. The client had previously been investigated by HMRC and omitted income/gains had been established as part of that investigation. There was, therefore, a serious risk of prosecution by HMRC or, the client faced significant financial penalties. OneE TDI approached HMRC's High New Worth Unit and made a voluntary disclosure to HMRC on behalf of the client. OneE TDI then prepared an extensive disclosure report detailing the errors and omissions made. Various Double Taxation Agreements needed to be considered in respect of the client's worldwide income/gains so as to minimise the potential tax and interest due. Our representations and arguments secured a 10% penalty (far lower than would normally be the case). [Top] Charity, Assets & Residence investigations Working with Lawyers OneE TDI were initially instructed by solicitors acting for a High Net Worth Individual who had previously set up an offshore settlement into which income and a right to income had been transferred. Previously unforeseen errors relating to this structure were identified as part of divorce proceedings. Significant levels of income that should have been returned in the UK had not been included on the client's Tax Returns. The financial penalties potentially faced by the client were significant. OneE TDI approached HMRC's High New Worth Unit and successfully argued that the case should be registered for civil investigation on the grounds that there had been no deliberate attempt to defraud HMRC. This secured immunity from prosecution and OneE TDI then prepared an extensive disclosure report detailing the errors and omissions made. A significantly reduction in the financial penalties chargeable by HMRC was secured by adopting this approach. [Top] Compliance Check – Income Tax enquiry Working with Accountants OneE TDI were engaged to act for a client who had just received notice of a Compliance Check – Income Tax enquiry. The accountant had had previous problems dealing with the local Inspector and, as the client handled a lot of cash as part of his business, the accountant wanted specialist advice to manage and contain the enquiry. OneE TDI met HMRC to proactively discuss its reasons for commencing the enquiry. We were able to immediately satisfy HMRC on a number of the risks identified and agree a timetable to comply with HMRC's Request for Information that minimised the disruption to the client's business. The Inspector initially wanted to Visit the Business Premises, but OneE TDI successfully argued against this. OneE TDI's representations fast-tracked the enquiry and led to the Inspector concluding that no adjustments were necessary. [Top] Compliance Check – Corporation Tax enquiry Working with Accountants OneE TDI were instructed at the settlement stage of a Compliance Check – Corporation Tax enquiry. The client had conceded that profits had been omitted for a number of years, but the accountant wanted a second opinion regarding on HMRC's omitted profit calculations. The amount of tax potentially at stake was significant. OneE TDI reviewed HMRC's calculations and identified a number of possible counter-arguments against misunderstandings or misconceptions that produced results in HMRC's favour. We prepared alternative arguments and calculations, which were ultimately accepted by HMRC. OneE TDI's involvement reduced the potential tax, interest and penalty by over 50%. [Top] Disclosures to HMRC Working with Lawyers OneE TDI were initially instructed by solicitors acting for a client who had discovered that he had unknowingly omitted offshore income/gains from his tax returns. The client had previously been under a Code of Practice 8 investigation so believed he faced a serious risk of prosecution by HMRC or, if the case could be dealt with on a civil basis, the financial penalties he potentially faced would be significant. OneE TDI approached HMRC and successfully argued that due to there being no evidence of serious fraud the case should be registered for a Compliance Check – Income Tax enquiry. OneE TDI then prepared a representations detailing the errors and omissions made, which was ultimately accepted by HMRC, and successfully presented an 'innocent error' argument securing our client no penalty. [Top] Employer Specialist Services – TRONC Scheme Direct (by recommendation) OneE TDI was engaged by a 5* London hotel that was concerned about its poor staff retention rates and the fact that there had been a downturn in customer satisfaction. The hotel wanted to explore how this might be reversed. OneE TDI presented a number of ideas, including the introduction of a TRONC Scheme whereby proceeds of the service charge were not incorporated in basic salary, but instead were distributed via a TRONC. A consultation exercise with staff to explain the advantages of the new system was undertaken. The potential benefits included them being better off in net pay terms and an opportunity to earn more through good performance. [Top] Employer Specialist Services – Termination Payments & Expatriate Employees Source: Working with Accountants OneE TDI were asked to provide specialist advice to a non-UK domiciled High Net Worth Individual. HMRC's Large & Complex office had commenced a complex 'dual contracts' enquiry. OneE TDI presented a factual disclosure to HMRC, including the detailed evidence required to support the client's case. A number of complex technical tax, PAYE and NIC issues were also argued. [Top] Employer Specialist Services– Termination Payments Working with Lawyers OneE TDI were instructed by lawyers acting for a senior executive of a major PLC who had sued his employer for constructive dismissal and breach of contract. A £465,000 settlement had been agreed and it was proposed to tax all bar the first £30,000. OneE TDI reviewed the settlement and broke it down into its component parts. A number of complex technical issues were argued with HMRC and the agreement was reached that only £115,000 of the total settlement should be subject to tax. [Top] Tax Tribunals – Making an Appeal Working with Accountants OneE TDI were instructed on a case where representations and grounds made for the acceptance of a late appeal had been refused by HMRC. The appeal concerned 'discovery' assessments that had been raised by HMRC, which were disputed by the client. He believed that he held sufficient evidence to demonstrate that the assessments were excessive. However, if the late appeal was not accepted the client was unable to progress his case and could then be liable for the tax assessed. A second opinion and specialist advice from us was sought. OneE TDI reviewed the case in detail and identified evidence to support claims that the client had a 'reasonable excuse' for not having submitted a timeous appeal. Our representations were accepted by HMRC and negotiations to settle the case re-commenced. [Top] Tax Tribunals & Appeals – First -tier Tribunal (Tax Chamber) Direct (by recommendation) OneE TDI were engaged by a large SME business who had received notice from HMRC that its Gross Payment Status was to be withdrawn. This was on the basis that the business had consistently failed to pay over its PAYE/NIC deductions on time. The removal of Gross Payment would have caused critical cash-flow issues for the business and would have prevented it from tendering for work from Local Authorities and Housing Associations (who were almost exclusively its customers). OneE TDI argued that, amongst other things, the business was effectively prevented from paying over the tax/NIC on time because its customers were late in paying their bills. HMRC refused to accept the explanations as being a reasonable excuse for late payment. The matter went to the First-Tier Tax Tribunal. [Top] Criminal Tax Investigations – Criminal to Civil Working with Lawyers OneE TDI were instructed by solicitors acting for an individual suspected of tax/VAT fraud relating to the importation of diamonds. HMRC also suspected that untaxed monies had been used to fund a lavish lifestyle, including the acquisition of a number of classic motors. OneE TDI prepared an expert report to counter the financial arguments put forward by the Prosecution. This report led directly to the criminal investigation being dropped. The case was transferred to the local Tax Office where the OneE TDI report was accepted as the basis for assessment. [Top] Criminal Tax Investigations – Forensic Expert Witness Working with Lawyers OneE TDI were instructed by solicitors acting for an individual being prosecuted for suspected tax/VAT fraud relating to the importation and onward sale of second-hand cars/vehicles. OneE TDI prepared an expert report to counter some of the financial arguments put forward by the Prosecution's expert accountant. Further negotiations led to a significant reduction in the tax and VAT being sought by HMRC as part of an agreed financial settlement – the Defendant did not argue that tax and VAT were owed. [Top] Proceeds of Crime Act Investigations – Forensic Expert Witness Working with Lawyers OneE TDI were instructed by solicitors acting for a client who had been convicted for VAT Missing Trader Intra-Community (MTIC) fraud offences. HMRC's Financial Investigator had calculated the client's alleged benefit from the fraud and further asserted that the client had assets that were hidden and undisclosed for confiscation. OneE TDI were asked to prepare a forensic expert report to consider the calculations and assertions made by HMRC and to provide alternative calculations/assertions to the Court, where appropriate. OneE TDI reviewed all the material/evidence provided and prepared an expert report that challenged a number of HMRC's findings. These were ultimately accepted by HMRC and the case was settled (in favour of the client) without the need for a confiscation hearing. [Top]
Working with Lawyers OneE TDI were instructed by solicitors acting for a client who had cash seized as a result of Operation Rize and had subsequently become subject to criminal investigation. The client maintained that the cash was from his legitimate business activities - albeit not all had been fully declared to HMRC. We were asked to validate the client's instructions and work with the lawyers to change the investigation from Criminal to Civil and then make a voluntary disclosure to HMRC. OneE TDI reviewed all the material/evidence provided and prepared a forensic expert report that supported the client's contention that the cash was from his legitimate business activities (albeit not all fully declared to HMRC). The report was used to convince the Police that no wider criminality than tax related matters was at issue. Consequently, the criminal investigation ceased and this allowed the client to make a full disclosure to HMRC. Importantly, all the cash seized by the Police was returned to the client. [Top]
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