No, I haven’t gone mad. A client has spent a lot of time and energy recounting what he had done over the years. But it didn’t add up – literally. It didn’t explain why HMRC was accusing him of tax evasion. Nor did it explain why HMRC had issued him with Code of Practice 9 and invited him to join the Contractual Disclosure Facility (CDF). Having sat there quite patiently, I explained how HMRC may take quite a simple approach. The approach being whatever you earn in your left hand you will spend or save in your right hand. Simples.
But no, my client went on to explain how he had bought this and that costing X and Y and had records to prove every penny. But he couldn’t explain how he had accumulated assets costing over £3m when he had only earned less than £1m over the same period.
The eureka moment
“Oh, I see what you mean.” My client then began to undo all his good work. He no longer had this asset and that asset, he had given them away so his assets only added up to £1m. That being the case, fine but you still spent £3m along the way.
“Ah but I borrowed the money” he said. “Who from?” I replied. “A friend” was his response. And how was the loan repaid I asked, “It wasn’t” was the reply “it was written off”.
Then the penny dropped and my client smiled and laughed. “It sounded good” he said.
Lies, damn lies and statistics
If you are being challenged by HMRC, don’t lie. You will be found out. And when you are found out, the penalties will be higher. Moreover, my relationship with my client became rather strained until he came clean to me.
I regularly represent taxpayers suspected of committing tax evasion. Like HMRC, I have been around the block a few times and have ways and means of getting to the truth.
When you re in a hole, stop digging
Having seen the error of his ways chose to explain matters. Having done a quick calculation, I was able to tell him he had just saved himself over £100,000 in penalties. Had he continued down that same path, he may involved “his friend” or worse still, he may even have gone to jail.
As it was, after about 18 months my client was out of that quagmire and never wanted to stray from the straight and narrow again. Result! And we have remained good friends.
And yes, the answer to life, the universe and everything, is 42.
Help is at hand
If you would like to discuss this matter further, please contact me at firstname.lastname@example.org or on 07979 313 010.