Border Force to Pay 100% of the Cost of Wine Seized Over Fears of Excise Evasion

Border Force has been ordered to pay for 100% of the defendants costs after the seizure of more than 16,000 litres of wine over fears of customs evasion was ruled unlawful.

Tajinder Barring, DPP Business & Tax solicitor, acted on the case for an established drinks supplier from whom Border Force seized a full lorry.

May 2018

Back in May 2018, Border Force officials at Anglesey Port stopped and inspected a vehicle carrying over 16,000 litres of wine coming from Ireland.

The officers believed there was a possibility of an attempt to evade excise duty, as they suspected the vehicle was not destined for France, as the driver had suggested.

Border Force contended that “an offence had been committed in respect of the goods by a person who had knowingly been concerned in the taking of steps with a view to the fraudulent evasion of excise duty” and therefore the wine was liable to forfeiture.

June 2019

A District Judge at Llandudno Magistrates court ordered the wine to be confiscated and disposed of last June.

Cork-based Euromax Commodities, the company who organised the shipment, appealed against the decision, with the help of DPP Business and Tax.

“There was no suggestion duty would be evaded”

After a three day hearing in Caernarfon Crown Court, Border Force’s case was roundly rejected. The Court ruled that the seizure of a shipment of wine should not have happened, and there was no suggestion that duty would be evaded.

Judge Huw Rees said, upon announcing the court’s decision, that Euromax Commodities was a reputable company and the decision to stop the vehicle was because it had been seized previously.

Since then, the vehicle has been sold and the ownership of the vehicle and the company’s operating license was questioned, but was not relevant to the ruling.

The court has ordered the UK Border Force to pay the costs of the appellant, which could include compensation of wine that was now out of date or disposed of.

 

Are you being accused of excise or duty evasion? Has HMRC or the Border Force seized your goods? Contact the experienced solicitors at DPP Business & Tax to see how we can help you get the best possible outcome.

Source: North Wales Live

Photo © Malcolm Neal (cc-by-sa/2.0)

Disguised Remuneration Settlements: What You Should Know

Following a government crackdown on illegal Employee Benefit Trusts (EBTs) and wider Disguised Remuneration tax avoidance schemes, a deadline was drawn up whereby employees and contractors who had received funds via these methods could voluntarily settle any tax they owed as a result.

This deadline allowed recipients of Disguised Remuneration schemes to:

  • Come to a settlement with HMRC regarding the amount of tax they owe
  • Set up a payment plan over 5-7 years or more
  • Pay a lower rate of tax on any required loan charge
  • Avoid any extra costs if the scheme in question was to move to litigation

However, that deadline has now passed, and the only remaining options for recipients of Disguised Remuneration schemes are to repay their loan in full, or to pay a loan charge.

Despite this, however, many individuals are still asking questions regarding the loan charge of 2019, e.g. “should I settle?”

So what exactly is disguised remuneration, when was the deadline to settle your tax affairs, what is the loan charge 2019 latest, and how much is the loan charge?

Disguised Remuneration Settlement “Rules”

In 2011, a set of “rules” were applied by the UK government to seize control of these illegal schemes and to ensure that tax was paid correctly. These rules included the following orders:

  • Loans made by Employee Benefit Trusts in place of wages or salaries must be made subject to the same amount of
  • PAYE
  • and National Insurance Contributions
  • Only if the loan is repaid will those contributions be waived
  • Those with salaries under £50,000 who have stopped using Disguised Remuneration Schemes can spread the cost over at least 5 years, while those earning under £30,000 can do so over more than 7 years.
  • Those who fail to begin to settle their affairs with HMRC before the deadline must pay a loan charge in full before 31st January 2020.

In 2016, additional clauses were added, stating that this same legislation would also apply to loans made prior to 2011.

The above rules apply to users of Disguised Remuneration Schemes whose loans have remained unpaid to date, and who have failed to provide HMRC with information regarding the settlement of their outstanding taxes by the deadline.

They also affect employers who provided any loans involved in Disguised Remuneration schemes and had not settled their affairs with HMRC by the deadline.

When is the Deadline for HMRC Disguised Remuneration Settlements?

Loan charge legislation terms were drawn up in November 2017 to assist any recipient of Disguised Remuneration schemes in settling their tax affairs with HMRC.

The deadline for action of this kind to be taken was 5th April 2019, so if you were the recipient of a disguised remuneration scheme, the time to negotiate your position with HMRC has now passed.

Everyone who has outstanding loan balances and has not discussed a settlement agreement should send all information about your loans to HMRC by 30 September 2019.

How Much is the Loan Charge 2019 & Should I Settle?

The size of a loan charge applied to the recipients of a disguised remuneration scheme depends directly on the amount of Income Tax and National Insurance Contributions that would otherwise have been required to be paid during the tax year on the amount that was “loaned”.

All amounts received through a Disguised Remuneration loan will be combined and made subject to the charge at the same time. HMRC has quoted the median settlement as £13,000.

For those who know they are likely to be affected by the loan charge 2019 and wonder “should I settle my tax affairs with HMRC?”, it is now too late to do so.

This means that anyone who still owes tax repayments connected to Disguised Remuneration will be required to pay the loan charge in full, and if the scheme in which they were involved is made the subject of litigation, they may receive further fines or charges.

If you are in the process of settling and began before the 5th April deadline, the aforementioned November 2017 terms still apply to you and you can continue to work with HMRC towards a settlement.

I Missed the Deadline – What Can I Do?

When it comes to the loan charge, as of 2019, the latest ruling is that you are simply required to pay it in full. However, as of April this year, HMRC have extended their support services to provide assistance to those who are unable to pay.

For further information on this subject, you should call HMRC directly, or contact cl.resolution@hmrc.gsi.gov.uk for contractor loan schemes or ca.admin@hmrc.gsi.gov.uk for all other disguised remuneration schemes. If you don’t arrange to pay the loan charge, you may be prosecuted for tax evasion.

It’s important to take immediate action if you’re concerned that you may need to pay the disguised remuneration loan charge. DPP Law can assist any individual who has missed the deadline to voluntarily settle their tax liabilities.

Proceeds of Crime Act 2002, Part 5: Civil Recovery or Criminal Recovery?

Part 5 of the Proceeds of Crime Act 2002 (or POCA 2002) enables enforcement agencies to recover property which has been obtained through unlawful conduct or organised crime, such as money laundering. This right can be exercised by the National Crime Agency (NCA) or another authority whether or not any proceedings have been brought in relation to a criminal offence.

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Section 22 Proceeds of Crime Act: A Second Bite of the Cherry

Section 22 of the Proceeds of Crime Act refers to the revisitation of earlier confiscation orders that were made at a time when the full amount originally believed to have been illegally obtained by a defendant was not available for recovery, and can currently be called upon by the prosecution at any time in order to confiscate the remaining sum.

If a defendant has come into an inheritance, won money or property, received any form of compensation, accumulated savings or purchased goods or property, Section 22 permits these finances or assets to be confiscated by the law until the total value of the original benefit figure has been covered.

Is Section 22 of the Proceeds of Crime Act Unfair?

There are a number of potential problems regarding the justness and morality of this particular piece of legislation. Firstly, if the defendant is not the only individual who has invested in a property, for example, and that property is duly confiscated by a law enforcement body citing Section 22 of the Proceeds of Crime Act 2002, any third party involved will potentially be required to forfeit their portion of the investment despite being innocent of any crime.

Secondly comes the matter of rehabilitation. According to legislation passed back in 1974, the UK legal system should be thoroughly engaged in the rehabilitation of offenders – yet there is very little possibility of this being achieved when those who have committed an offence in the past are liable to have any finances, property or assets seized from them at any given time. The possibility of purchasing a home or setting up a business becomes far more difficult, potentially forcing the individual in question to seek out “under the radar” or unlawful ways to make a living once again and thus creating a vicious circle of financial crime.

If a defendant owns property already, and that property increases in value over a number of years, there is always the possibility of Section 22 of the Proceeds of Crime Act kicking in and any amount of interest that has accumulated being seized, trapping the individual in place.

Pensions, too, are potentially no longer safe. From 2015 onwards, pension pots have been accessible in full to the people set up to benefit from them. However, because of this they have also become “fair game” under Section 22. Stripping an elderly individual of their financial support could be argued to be very unfair, no matter their criminal history.

As of the present time, it is up to the court to determine when sufficient time has passed since the original offence to confirm that Section 22 can no longer be invoked. Prosecutors can also argue that significant inflation has taken place since the original confiscation order was made, meaning that the law can confiscate more money or assets than was originally stated.

How Can I Protect Myself from the Application of Section 22?

The best approach to take in order to steer clear of the threat of Section 22 is to ensure that there is a clear and transparent paper trail for any and all sums of money, assets and properties that may have come into your possession, for exampl,e by way of inheritence, interest in property or accumulating savings.

You should seriously consider engaging the services of an experienced confiscation specialist to help you to protect yourself from incorrect use or misuse of this legislation.

Can You Appeal a POCA Section 22 Judgement or Confiscation? 

It is possible to appeal against a decision in a court of appeals to confiscate your goods, property, finances and assets under Section 22 of the POCA 2002, although many of the specifics of this legislation still rely heavily on the court’s discretion.

One way of successfully arguing against the confiscation of property, assets or monies is to engage a confiscation lawyer to study and contest the “trigger condition” stated by the prosecution. This term refers to the occurence or change in conditions that has prompted the prosecution to revisit the confiscating procedures in question. If, for example, the prosecution has argued that your available finances have significantly increased since the original confiscation took place, and you and your legal advisor are able to conclusively prove that they have not, or there are third party interests that have not been taken into consideration during your original confiscation proceedings or your original solicitor failed to advise you adequately in respect of the confiscation proceedings. All of these scenarios present potential grounds to appeal the prosecution’s decision to pursue asset seizure under Section 22.

Another approach is to argue against fairness of these proceedings. If it can be argued that the passage of time since the original confiscation is excessive, or proven that assets that you now possess are not under your sole name and that seizing them would negatively affect an innocent third party, your appeal may be successful.

If you have been affected by Section 22 of the Proceeds of Crime Act, DPP Business & Tax can help. In these cases, it’s vital to seek profess

Failure to Prevent the Facilitation of Tax Evasion: What You Need to Know.

The Criminal Finances Act of 2017 serves to criminalise the failure of businesses to prevent the facilitation of tax evasion. The two offences created under this new legislation have a basis in the Bribery Act 2010, and mean that your company can be held responsible for illegal tax-related activity undertaken by contractors or other organisations with which it has professional dealings – whether the tax in question is:

  1. Owed to the UK government or
  2.  Overseas tax

In order to ensure that your company will not be investigated by Her Majesty’s Revenue and Customs as a result of another organisation’s attempts at tax evasion, it is worth examining the new act to see what actions to take.

What Constitutes the Facilitation of Tax Evasion?

Under the new act, the offence is defined thus: “a relevant body (B) is guilty of an offence if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with B”.

Will My Business Be Prosecuted?

To find out whether you are liable to fall foul of facilitation of a tax evasion inquiry, you and your management team must first understand the stages that would constitute an assessment of your company.

  1. The uncovering of proof that criminal tax evasion has taken place. This evasion may have been undertaken by an individual or a body professionally connected to your organisation.
  2. The discovery that this offence was facilitated by an individual, group or department within your organisation, and that this facilitation took the form of aiding, abetting, counselling or procuring the aforementioned evasion of tax.
  3. The historical refusal or neglect of your organisation to put in place processes and implement procedures that may have prevented the aforementioned evasion of tax from taking place. Those investigating your company’s potential failure must consider whether it would have been reasonable to expect you to have had such measures in place at the time.

Investigators can only consider the final stage once they are satisfied that your circumstances meet the requirements in stages one and two.

If your company has been found lacking, or at fault, throughout all three stages, then it is liable to be prosecuted for failure to prevent the facilitation of tax evasion.

What Are the Six Guiding Principles of Failure to Prevent the Facilitation of Tax Evasion?

While policing the activities of all the individuals and companies connected with your organisation may seem considerably difficult, there is in fact an official set of six guiding principles of adherence to the new legislation in existence – created by HMRC and designed to help organisations improve their understanding of the activities of their partners and service providers and tighten their security against any potential fraud or tax evasion.

Principle One: Risk assessment

When developing your risk assessment, your company should first take into account how likely it is that any of the individuals or organisations acting on your behalf or alongside you would evade the correct payment of tax. This will require considering that party’s potential motives, means and opportunity – asking questions such as:

“Why would this company commit taxation fraud?”

“Can we think of ways in which they would be likely to do it if so?”

“Is it at all possible that this would happen?”

You should then work towards a strong risk management strategy, which should continue to be reviewed for as long as your company and the third party do business together.

This is the most vital step, as not only will it shield your organisation against the dangers of entering into a contract with a potentially fraudulent body, but it will also provide you with a defence in response to the aforementioned third stage of an assessment.

Principle Two: Proportionality of risk-based Procedures

Preventative procedures should be proportionate to the risk you/your company faces. Your organisation should be proactive in the implementation of its chosen approaches of persons associated with you committing evasion facilitation offences. However, while it is tempting to make sure that your back is covered when it comes to new government legislation, you must ensure that the plans you intend to put in place are achievable.

Your management team must consider the scale of the risk in order to construct procedures that are straightforward and proportionate. For example, close, extensively recorded supervision of each agent/employee is not always achievable without creating unmanageable amounts of extra work. The new offences do not require you to undertake excessive procedures, so simpler alternatives should be sought.

The scale and complexity of your companies activities are important factors. The reasonableness of prevention procedures should take account of the level of the control supervision the organisation is able to exercise over a particular person activity acting on your behalf. A combination of formal policy and practical steps to ensure such a policy is implemented and monitored is a good step.

Principle Three: Top Level of Commitment

All changes that are to be made via the implementation of new procedures should become embedded into the working life of your business and taken as seriously as possible so as to adopt a no-tolerance attitude towards facilitation of tax evasion.

A committed approach should be adopted from the “top-down”, with the CEO and management leading by example, so that diligence and care can spread throughout the senior ranks of your organisation. The prevention of tax evasion facilitation should be the duty of your entire staff, and of top-level management in particular.

The involvement of senior management will also enable a greater and clearer communication of the existence of your prevention processes to external bodies. Partners, contractors and any other individuals with whom your company works will be made more acutely aware of your position on the facilitation of tax evasion if it is championed by the CEO in person.

Principle Four: Due Diligence

Proper due diligence procedures should be applied and followed by persons who perform services on behalf of your company to reduce risks, and quantifiable steps taken in order to recognise and prevent criminal behaviour. This approach should not only be applied to companies newly entering into your organisation’s list of partners and contractors but should also be applied in hindsight.

Now that the Criminal Finances Act has been initiated, all of your company’s external contacts and service providers should be made subject to due diligence checks, however long your history with them may be. You may believe that a certain industry poses a higher risk than others of being utilised for tax fraud. Consequently increased levels of checks should be applied to address such risks.

Principle Five: Communication

Every member of your company should have a practical understanding of both the significance and implementation of your prevention policy. Not only should each individual be confident in the inner workings of your prevention policies these new processes, but your organisation should also be able to effectively communicate them to contractors, service providers and partners.

Regular training should be provided where possible in order to pass on the message that tax fraud will not be tolerated at any level, and no person or body that engages in such activities will be able to continue their dealings with your company. In addition, news feeds communicating your companies anti-tax evasion policy can act as a deterrent to those who seek to use your company for illegal activity

Principle Six: Monitoring and Review

Your systems and procedures should never be considered a finished product but should be adjusted, adapted and improved in response to the ongoing observation. When you first set them out, you should work into all documentation an agreement that the procedures must be revised and reconsidered once a set period of time had passed.

If your company is a large multinational, personal implementation of preventative measures by seniors may not be practical and instead, a sub-department being delegated may be seen as reasonable.

What are the Penalties for Failure to Prevent the Facilitation of Tax Evasion?

Your business could receive an unlimited fine for failing to prevent the facilitation of tax evasion. The minimum amount to be recovered will be 100% of the amount of tax the third party neglected to pay. Criminal convictions can also be imposed and recovery actions such as confiscation orders may be taken.

Of course, when it comes to the expected timescale for implementing new processes and procedures, the government and HMRC will take into account the nature and size of your company and the resources it is able to draw upon. However, it is expected that you will do all in your power to ensure that a well-considered plan of action is put in place at your company’s earliest possible convenience.

What Types of Activities Could Put My Business at Risk?

Sector: If your organisation is part of a particular sector, such as financial services or law, it is immediately more likely to be investigated for facilitating tax evasion.

Value of projects, products or services: Should you be dealing with high net worth companies and service providers, they and you are perhaps more likely to be the subject of taxation investigations than other organisations.

Transparency: If a partner or contractor connected to your company gives the impression of being unreasonably covert with regards to financial activity, there is a possibility that suspicions will be raised.

System complexity: If a supply chain or transaction process seems from the outside to be purposefully opaque or complex, investigators may believe that the companies involved are masking fraudulent financial activity. Therefore, it is highly advisable to keep fiscal processes as straightforward and above board as possible.

History: If there is a history of the products or services provided by your company or its partners being utilised in a way that facilitates tax evasion, this again may raise the suspicions of HMRC and could see you investigated for the facilitation of tax evasion.

In any of the above circumstances, there should be no cause for concern as long as you have ensured that your organisation has undertaken a full risk assessment and has put efficient processes in place.

Contact our Business & Tax solicitors team for full support and advice.

I’ve Been Accused Of Tax Evasion – What Do I Do?

If you’ve been accused of tax evasion, chances are you’ll be feeling distressed. It’s important to keep in mind that tax fraud and evasion is a serious crime and that burying your head in the sand does not mean it will go away eventually. In fact, ignoring the situation will only serve to make everything worse in the long run.

There are many reasons why someone could find themselves falsely accused of tax evasion – maybe you placed too much trust in your accountant when they mentioned a ‘foolproof’ scheme. Or maybe you overlooked something when completing your tax return. Whatever the reason for the accusations, we strongly advise seeking professional legal advice from a specialist tax solicitor.

Keep in mind: HMRC are legally allowed to name and shame criminal tax avoiders who owe more than £25,000.

Could I go to prison for tax evasion?

Tax evasion is a serious crime that has seen a crackdown from the law in recent years. If found guilty, you could be facing a prison sentence, especially if this is not your first offence. The maximum penalty for tax evasion is seven years or an unlimited fine.

HM Revenue and Customs now have greater powers to obtain information regarding your tax affairs and have specialist solicitors and barristers to go after suspected tax evaders. This is why we strongly recommend that you act quickly and hire the services of a professional who will fight your corner.

What will happen if I am accused of tax evasion?

HMRC will want you to pay the money that you owe them in unpaid income tax, but they will also want to see a prosecution if you’re found guilty during an investigation for tax. They may even want to make an example of you to deter others from the temptation of income tax evasion, money laundering, etc., especially if you owe a lot of money.

If you’ve been accused of tax evasion, contact one of our experienced tax solicitors today. We have decades of experience in dealing with HMRC, and can advise you accordingly for your HMRC inspectioninterview under caution and everything else.

What is The Criminal Finances Act 2017?

On the 30th September, the Criminal Finances Act 2017 came into force. This was a government response to the infamous “Panama Papers” Scandal and promises to crack down on firms that have failed to prevent tax evasion from taking place. If you’re a firm owner who is facing prosecution for your involvement in a tax evasion scheme, please contact us and we will advise you of your next steps.

What Should I Do If I’ve Been Accused Of Tax Evasion?

The first thing you should do if you’ve been accused of tax evasion is to seek legal advice and representation immediately. The correct legal support will help you throughout your investigation and your solicitors will be able to advise you on your next steps.