HMRC views some tax avoidance schemes as a “misrepresentation of the true nature of events”
According to HMRC, the fine line between tax avoidance and tax evasion has been crossed and deliberately so. HMRC’s unit known as Offshore Corporate and Wealthy (OCW) was established in the wake of the ‘Panama Papers’ scandal in 2016 to investigate serious non-compliance by businesses and the wealthiest taxpayers
It’s alright, it’s tax free!
They say that a little knowledge can be dangerous. Likewise, being self taught off the internet can cause unexpected tax problems. A lot of taxpayers around the work want to be able to say “it’s tax free”.
It’s no secret – it’s just none of your business!
So we have now had another chapter of the saga of secret bank accounts with the Pandora Papers. Just like their forerunners, it makes interesting reading – but so what. The “offshore world” exists because of demand – the demand for discretion and privacy. It’s no secret, it’s just none of your business!
Offshore does not mean off HMRC’s radar
The fact a taxpayer has an offshore bank account or an offshore trust or offshore anything can raise or add to the concerns of HMRC. Not so much as “what is there to hide” but more the fact that its not so transparent compared to being on the mainland UK.
Is HMRC challenging you?
HMRC holds a wealth of information on all taxpayers. Not surprisingly though, from time to time HMRC can come across information on a taxpayer that they did not expect. You may think that you have disclosed everything but now HMRC is challenging you and want to investigate your tax affairs.
By failing to prepare, you are preparing to fail
Some of you may recognise this as a quote from Benjamin Franklin. In my world it is a very true statement and I take time to explain its importance to others particularly in relation to failing to prepare for meetings with HMRC.
Who is in charge of your tax investigation or is it meandering out of control?
So many times I hear the answer back “HMRC is in charge of course!” Perhaps the question is more “Who should be in charge of your tax investigation”. Either way, the answer should be firstly the adviser is in charge and secondly the taxpayer. Otherwise your tax investigation can meander out of control.
Is confusion and misunderstanding the same as tax fraud?
Running a business is not always easy no matter how many staff you employ or what procedures you have in place. When there is too much to be done in the time and within the resources available, confusion and misunderstandings can easily occur. The result is inevitably mistakes. Or was it deliberate? Is it tax fraud?
Having invested in the company, you then discover tax fraud
Unfortunately, this nightmare scenario is not uncommon. No matter how much due diligence is undertaken, a fraud can be very sophisticated and may only surface after certain people have left. Often the fraud includes the Managing Director and other key employees, all of whom have now left.
Can HMRC ask for that?
Yes – is the simple answer! But perhaps the question really should have been “Are HMRC entitled to have access to that?” Anyone can ask for anything. But can HMRC have access to that information? The information may be sensitive. Asking is one thing – giving is another.