Category: Legal

Criminal Tax Cases Shifted onto the Taxpayer HMRC
LegalRegulation

Criminal Tax Cases Shifted onto the Taxpayer HMRC

Phil Berwick, partner* and Head of Contentious Tax at law firm Irwin Mitchell, comments:  “The proposal represents a fundamental shift in the burden of proof. As the Government seeks to plug financial gaps from previous failed initiatives, it is becoming more desperate. Not everybody who has failed to declare foreign income has done so deliberately. There is a danger that HMRC will focus on “soft” targets, and hardcore evaders will still evade capture or punishment. There is also the danger that the new rules will subsequently be extended to change the burden of proof in other situations.

“The UK- Swiss Agreement raised a pitiful amount compared to what was estimated by the Government, and the Liechtenstein Disclosure Facility is on course to also fall woefully short of the £3 billion estimated.

“There is already a maximum penalty of 200% of the tax that has not been paid, in addition to interest and tax for up to 20 years, for taxpayers with undeclared foreign income.

“This latest announcement follows on from the news that HMRC will have the power to raid taxpayers’ bank accounts. Because HMRC has failed to prosecute a sufficient number of offenders, the Government is seeking to change the rules to make it easier to meet targets, and prevent further embarrassment.

“HMRC has had a significant amount of data on offshore offenders for a long time, but has failed to pursue criminal investigations. HMRC already has sufficient powers to pursue these taxpayers. Where will HMRC’s quest for increased powers end?

Chancellor George Osborne has announced plans to give new powers to HM Revenue and Customs to make it easier to prosecute people who evade taxes by hiding money offshore. The intention is that criminal prosecutions can be brought against anyone with undeclared foreign income, even if they did not intend to evade taxes. HMRC have come under attack from MPs for the low number of evader it prosecutes.

HRMC will consult on new penalties for offshore tax evasion, and a document will be published on Monday.

HMRC Unable To Disclose Number Of Civil Fraud Investigations
LegalRegulation

HMRC Unable To Disclose Number Of Civil Fraud Investigations


A HMRC facility which encourages people who have committed tax fraud to admit their offences in exchange for avoiding a criminal investigation has attracted 129 requests from individuals since it launched at the beginning of 2012.

Although the figures, which were obtained from HMRC by law firm Irwin Mitchell using the Freedom of Information Act, are equivalent to more than one request a week, a tax investigations expert at the national law firm says that there is a lack of transparency about the scheme in relation to whether taxpayers are receiving the protection that they are looking for.

HMRC has been unable to disclose how many taxpayers were accepted into the process, and how many were subject to criminal investigation, despite making a voluntary approach to the taxman. HMRC is also unable to disclose the number of cases it has registered under the Contractual Disclosure Facility (CDF), because it appears that this information is not recorded centrally.

Established on 31 January 2012, the CDF enables a taxpayer to admit to fraud in exchange for immunity from prosecution, providing certain conditions are met. The process can either be initiated by HMRC, or a taxpayer can voluntarily ask to be admitted into the facility.

Up until now, HMRC has not published details of how many individuals have made requests. Following Irwin Mitchell’s request, it has been revealed that 65 people approached HMRC to enter the CDF from 31 January 2012 to 31 January 2013, and 64 between 1st February 2013 and 31st December 2013.

Phil Berwick, partner* at law firm Irwin Mitchell, said: “It must be a concern for HMRC that only, on average, six taxpayers a month are coming forward voluntarily to admit fraud. It may be that taxpayers are using other methods to disclose their irregularities, but the numbers registering for the Liechtenstein Disclosure Facility (LDF) – the obvious alternative – are on the decline.

“I can understand that HMRC does not want to guarantee a taxpayer that they will be allowed to use the process, and that HMRC may decide to pursue a criminal investigation, but it does not make sense to withhold the historic data.

“It is a surprise, and a concern, that HMRC can’t provide the number of fraud cases they are investigating using the Contractual Disclosure Facility. They are constantly banging the drum that they will come down hard on tax evaders. The Contractual Disclosure Facility is only one weapon in HMRC’s armoury, but it can’t be hard to record this information, and you would think that HMRC would want to know the number of fraud cases it is investigating.

“There will be concern among those who pay their taxes that HMRC is not able to establish how many cases they are pursuing using their civil fraud process.

“In many cases, I suspect that taxpayers seeking immunity from criminal investigation for fraud by using the Contractual Disclosure Facility are missing a trick, as they could use the Liechtenstein Disclosure Facility and get a better result.”

Phil Berwick added: “Despite HMRC’s various campaigns, the figures that have been released suggest that taxpayers who have committed fraud are not coming forward voluntarily, and are waiting for the taxman to find them. HMRC’s inability to provide the number of civil fraud cases it is investigating will only reinforce that belief.”

Launched by HMRC in 2009, the LDF allows taxpayers with unpaid tax to settle their liability with HMRC whilst avoiding a criminal investigation. In most circumstance, this is on very favourable terms when compared to using the normal rules. In some cases the HMRC foregoes some of the tax that is due and the penalty applied is usually lower than the amount charged outside the facility. The LDF closes to new registrations on 5 April 2016.

Weil Appoints Chris McLaughlin
LegalRegulation

Weil Appoints Chris McLaughlin

International law firm Weil, Gotshal & Manges has announced that Chris McLaughlin will join its London office as a partner in the Banking & Finance practice.

Chris, who was most recently a partner at Hogan Lovells, has extensive experience acting for banks and borrowers on the financing of cross-border private equity buyouts, European real estate acquisitions, and restructurings.

Chris’ arrival comes on the back of a period of strong growth for Weil’s London and wider European leveraged finance practice, following the recruitment of Chambers Band 1 ranked Stephen Lucas in 2011, along with Mark Donald and James Hogben in London, and Olivier Jauffret and James Clarke in Paris, over the last three years. In addition to the now 12-strong partner-led European leveraged finance group, Weil also boosted its high yield practice with the recruitment in June 2013 of Gil Strauss. His addition also follows that of financing expert Courtney Marcus, who rejoined the Firm as a partner based in the Dallas office in November.

Barry Wolf, Weil’s Executive Partner, said, “We are delighted that Chris is joining Weil to further enhance the growing European Finance practice. In a short space of time, Stephen Lucas and the London team, working with our teams in Paris, the rest of Europe and the US, have established a leading reputation for sophisticated leveraged finance work.”

London Managing Partner, Mike Francies, added, “We are one of the few firms with a Chambers Band 1 ranking in the UK both for Sponsor Finance and for Private Equity thereby offering clients the full range of European leveraged financing solutions covering loans, high yield and yankee loans. We look forward to Chris being part of the team expanding this further.”

The announcement follows a successful twelve months for the London Banking team and the office in general. The Banking team have acted on a number of deals recently including the following in 2013: European sponsor-side deals for Avista Capital and Nordic Capital on their Swiss take-private of Acino Holding; OMERS Private Equity on its £390 million acquisition of Civica, and Ontario Teachers’ Pension Plan on its acquisition of Busy Bees, and bank-side representations for the mandated lead arrangers on Advent International’s £1.16 billion public-to-private bid for Unit4 and Hellman & Friedman’s £1.5 billion buyout of Scout24; and Yankee loan sponsor financings for Charterhouse Capital Partners on its €500 million acquisition of Armacell, Advent International portfolio company Oberthur on its debt refinancing and acting for the lenders on Carlyle’s yankee loan acquisition of Chesapeake.

Weil’s London office has received a host of awards and recognition for its lawyers in the past twelve months including: retaining its Band 1 rankings for Sponsor Finance and Private Equity in Chambers UK 2014; top tier rankings in Chambers 100 and Legal 500 this year; and awards including “Most Innovative Firm in Corporate Law” at the FT Innovative Lawyers Awards Europe 2013, with standout entries and commendations in a further three categories including Finance law. With recent growth, we now have top ranked practices in Sponsor Finance, Restructuring and Fund Formation, to complement our existing top ranked Structured Finance and Private Equity practices.