Tax & VAT Fraud Defence

BSQ’s highly experienced team of tax experts provide advice to companies and individuals under investigation by HMRC.

Prosecutions for tax fraud are on the increase, with the authorities often pursuIng these cases aggressively. BSQ’s highly experienced team of tax experts provide advice to companies and individuals under investigation or under threat of prosecution by HMRC. In our experience, the most common problems arise when your local tax office has a query about a tax or VAT return. Usually your accountant will be your first port of call., but when it gets complicated our specialist solicitors are here to help.

Complications can arise when the tax authorities are threatening a criminal prosecution rather than seeking a civil settlement. Civil settlements can take the form of a COP 9 Agreement in tandem with a contractual disclosure facility (CDF) where the HMRC agrees not to start criminal proceedings for an alleged fraud if in return the taxpayer makes full disclosure. HMRC can re-open tax assessments going back 20 years and can ask for the tax due, interest, and impose additional financial penalties. Any material errors or false statements when co-operating could result in prosecution.

HMRC have their own guidelines as to when a COP9 /CDF is appropriate.  What we’ve noticed recently is that the authorities are less willing than before to use this procedure particularly if they are investigating tax avoidance schemes.

If HMRC are considering a prosecution, one of the first things they will do is ask the person concerned to attend an interview under caution.  White collar crime specialists like Daniel Godden and Roger Sahota have extensive experience of representing individuals at interviews under caution, which are conducted according to the procedure set out in the Police and Criminal Evidence Act 1984.

Our solicitors have conducted hundreds of these types of interviews. They provide an opportunity for us to assess the strengths and weaknesses of a case and decide if there is any possibility of persuading the authorities to discontinue an investigation. In the past we have managed to achieve this by pointing out the flaws and weaknesses in the evidence.

Notable pre-charge interventions include the case of S who was wanted by the HMRC for his involvement in a film financing tax arrangement.  Following Daniel's intervention, the authorities abandoned their efforts to extradite him to the UK.

These types of tax avoidance schemes are one of BSQ’s specialist areas although we have represented clients across the whole spectrum of tax and fraud enquiries including VAT and excise fraud allegations.

The fallout from the Panama papers scandal means that HMRC is now flush with data released from foreign jurisdictions with details of UK taxpayers undeclared income and assets located abroad.

It is important to keep in mind that in 2013 the Director of Public Prosecutions announced that the authorities would be targeting 'sophisticated investors' rather than simply the promoters or designers of tax avoidance schemes.

We’re currently representing an individual in the first test case where an investor alone has been targeted for this reason.

Proving dishonesty to the criminal standard is very difficult in these type of cases – and it’s our job to ensure that the Crown Prosecution Service have a mountain to climb if they try.

Client A was prosecuted by the CPS Specialist Fraud Division for fraud by false representation resulting from a HMRC investigation in relation to an alleged Montpellier tax avoidance scheme. The facts were that RC had purchased the Contract for Difference which the CPS/HMRC believed was a device for securing a tax advantage based on an artificial capital loss. The case was novel as it was alleged that the offence of fraud because RC had purportedly fraudulently misrepresented his subjective intentions for entering into the scheme. BSQ successfully applied to dismiss all charges in the Crown Court. This brought to an end a significant criminal investigation by HMRC for both RC and others. Read about the case in Taxation.Co.UK

Client B was an extremely high net worth individual investigated by the HMRC for non-payment of tax through avoidance facilitated by complex corporate arrangements. HMRC requested B’s agreement to a COP9 procedure meant that no criminal prosecution will follow subject to full disclosure of a person’s assets and income. BSQ advised B to reject the COP9 facility – where successful refusal of COP9 procedure is vindicated it is likely to lead to a significant reduction in penalties. BSQ partner Daniel Godden was instructed.

Client C were a firm of chartered accountants subjected to a full audit and criminal investigation by the HMRC. BSQ were instructed to advise the firm during the investigation. This concluded with no criminal charges and an agreed HMRC amendment program whereby the practice agreed to adjust returns submitted on behalf of its clients over a limited duration. BSQ partners Daniel Godden and Roger Sahota acted. C continues in practice.