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explorerJC




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PostPosted: Sat Sep 15, 2018 6:00 pm    Post subject: Tw@ts at HMRC Reply with quote

as ever, i am reading last Sunday's papers today...

"At a crime conference in cambridge last week....deputy director of HMRC...[admitted that]....very wealthy and prominent members of the community were afraid of the reputational damage that a criminal trial for fraud...or tax evasion would bring".

So they tend not to prosecute although they are happy to go after individuals and small businesses.

Chair of the commons public accounts committee highlighted the lack of equality under the law...

When will the supposed elites wake up?
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stenard




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PostPosted: Mon Sep 17, 2018 9:11 am    Post subject: Reply with quote

Maybe I'm missing something, but that quote in isolation means nothing.

You seem to be implying he then went on to say that because of what you quoted, HMRC would not prosecute, but it could equally have been an initial point indicating why those people are less likely to commit an offence, as the reputational damage to them is not worth the risk.
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explorerJC




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PostPosted: Mon Sep 17, 2018 9:46 am    Post subject: Reply with quote

stenard wrote:
Maybe I'm missing something, but that quote in isolation means nothing.

You seem to be implying he then went on to say that because of what you quoted, HMRC would not prosecute, but it could equally have been an initial point indicating why those people are less likely to commit an offence, as the reputational damage to them is not worth the risk.


not the clearest post certainly, but 'so they tend not to prosecute' is the give away....
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Jorgan




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PostPosted: Mon Sep 17, 2018 9:57 am    Post subject: Reply with quote

I guess the Govt is afraid big business or billionaires will take their money/businesses elsewhere.
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Whisk




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PostPosted: Mon Sep 17, 2018 10:28 am    Post subject: Reply with quote

But does "tend not to prosecute" mean "let them get away with it", or do they pay up the outstanding tax and penalties without it going to court?
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explorerJC




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PostPosted: Mon Sep 17, 2018 11:24 am    Post subject: Reply with quote

Jorgan wrote:
I guess the Govt is afraid big business or billionaires will take their money/businesses elsewhere.


nothing to do with Gov unless it is under a directive
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explorerJC




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PostPosted: Mon Sep 17, 2018 11:25 am    Post subject: Reply with quote

Whisk wrote:
But does "tend not to prosecute" mean "let them get away with it", or do they pay up the outstanding tax and penalties without it going to court?


apparently they use that as a lever for payment..

...no data on the article as to %s recovered...
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Whisk




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PostPosted: Mon Sep 17, 2018 12:37 pm    Post subject: Reply with quote

explorerJC wrote:
Whisk wrote:
But does "tend not to prosecute" mean "let them get away with it", or do they pay up the outstanding tax and penalties without it going to court?


apparently they use that as a lever for payment..

...no data on the article as to %s recovered...


Thankfully, I've never been on the receiving end of an HMRC audit into my personal tax affairs.

From a corporate point of view, they audit you, tell you what they think you should have paid in addition to what you've already paid and what they are proposing to fine you.

The fine is set as a % of the unpaid tax and can vary between 0 and 100%, depending on whether you've deliberately omitted something from your return and how cooperative you've been.

If you accept the extra tax and fine then you pay up and move on. You don't end up in a situation where you pay less tax than they say you owe. Your best case scenario is that the penalty is a low %.

If you challenge it and you don't come to an agreement with HMRC, then I guess you end up in court.
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explorerJC




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PostPosted: Mon Sep 17, 2018 12:41 pm    Post subject: Reply with quote

Whisk wrote:
explorerJC wrote:
Whisk wrote:
But does "tend not to prosecute" mean "let them get away with it", or do they pay up the outstanding tax and penalties without it going to court?


apparently they use that as a lever for payment..

...no data on the article as to %s recovered...


Thankfully, I've never been on the receiving end of an HMRC audit into my personal tax affairs.

From a corporate point of view, they audit you, tell you what they think you should have paid in addition to what you've already paid and what they are proposing to fine you.

The fine is set as a % of the unpaid tax and can vary between 0 and 100%, depending on whether you've deliberately omitted something from your return and how cooperative you've been.

If you accept the extra tax and fine then you pay up and move on. You don't end up in a situation where you pay less tax than they say you owe. Your best case scenario is that the penalty is a low %.

If you challenge it and you don't come to an agreement with HMRC, then I guess you end up in court.


only some end up in court and others do not...

a two tier system is therefore in operation...
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stenard




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PostPosted: Mon Sep 17, 2018 12:51 pm    Post subject: Reply with quote

But that's not true. As Whisk says, if HMRC issue an assessment and you disagree with it, your only option it to take them to First Tier Tribunal and then potentially escalate it from there.

The reason most wealthy or high profile taxpayers wont end up in court is because they can afford to pay, and dont want the stress and reputational damage of public litigation. I imagine the reason most smaller businesses or individuals end up in court is because they can't or won't pay, and therefore the only option open to HMRC is to go down a court route.

Despite people believing HMRC are more lenient on big business or wealthy individuals, that's just not the case from my experience. There is a level of materiality at play (even though by the book materiality shouldn't come into taxation), but in the eyes of a tax inspector, all taxpayers are held to account.
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explorerJC




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PostPosted: Mon Sep 17, 2018 2:07 pm    Post subject: Reply with quote

stenard wrote:
But that's not true. As Whisk says, if HMRC issue an assessment and you disagree with it, your only option it to take them to First Tier Tribunal and then potentially escalate it from there.

The reason most wealthy or high profile taxpayers wont end up in court is because they can afford to pay, and dont want the stress and reputational damage of public litigation. I imagine the reason most smaller businesses or individuals end up in court is because they can't or won't pay, and therefore the only option open to HMRC is to go down a court route.

Despite people believing HMRC are more lenient on big business or wealthy individuals, that's just not the case from my experience. There is a level of materiality at play (even though by the book materiality shouldn't come into taxation), but in the eyes of a tax inspector, all taxpayers are held to account.


well, the deputy director disagrees with you...
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stenard




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PostPosted: Mon Sep 17, 2018 2:53 pm    Post subject: Reply with quote

So I've now tried to follow up what article you are meaning. I'm guessing it's the Times one, that I can't see in full, but the same topic is talked about here: https://www.huffingtonpost.co.uk/entry/hmrc-tax-crimes-prosecution_uk_5b9634c7e4b0162f472ee224

I'm guessing you are going by this:
Quote:
When deciding whether to deploy our resources, we try to understand what motivates different types of offenders. For example some tax offenders are very wealthy, prominent members of the community. We know that these types of people do not want the reputational damage of custodial sentences, and we can use that to our advantage.


Interestingly, the quote there does not include the reference to fraud and tax evasion that you originally suggested. But I can now see I glossed over that part in your original post (if it's indeed what was said), and was thinking more about litigation related to underpaid tax.

If you are specifically meaning custodial sentencing and prosecution for tax evasion and fraud, then I don't really see much difference from any aspect of the criminal justice system. "Deals" and out of court plea agreements are commonplace across the spectrum of criminal proceedings.

The other point would be that a wealthy person or celebrity will almost certainly have a level of detachment from what went on. They'll have paid an accountant or advisor to manage their affairs. Whilst they might be ultimately responsible for the tax due, the likelihood of a sentencing judge sending them to prison for being poorly advised is low I would have thought. Therefore it is not in HMRC's (or the publics) interest to pursue an outcome that is unlikely to transpire. All the referenced cases such as Jimmy Carr were tax avoidance anyway, which isn't a criminal act.

The reason most "smaller fish" tax evasion cases are likely treated more harshly is because they are so vanilla. A small trader falsifying their income, or working cash in hand to bypass VAT, is knowingly doing so evade the tax. A wealthy person is not going to be so naive if they have 10m to invest. They'll be advised to do something creative, which you may not like, but may well be acceptable and in accordance with the tax law, and if it ultimately transpires to not be, will have enough grey areas in it to make it much more likely to fall within avoidance.
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explorerJC




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PostPosted: Mon Sep 17, 2018 4:06 pm    Post subject: Reply with quote

Yes, sunday times...

will see if i still have the article
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Tigger




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PostPosted: Tue Sep 18, 2018 5:40 am    Post subject: Reply with quote

explorerJC wrote:
Whisk wrote:
explorerJC wrote:
Whisk wrote:
But does "tend not to prosecute" mean "let them get away with it", or do they pay up the outstanding tax and penalties without it going to court?


apparently they use that as a lever for payment..

...no data on the article as to %s recovered...


Thankfully, I've never been on the receiving end of an HMRC audit into my personal tax affairs.

From a corporate point of view, they audit you, tell you what they think you should have paid in addition to what you've already paid and what they are proposing to fine you.

The fine is set as a % of the unpaid tax and can vary between 0 and 100%, depending on whether you've deliberately omitted something from your return and how cooperative you've been.

If you accept the extra tax and fine then you pay up and move on. You don't end up in a situation where you pay less tax than they say you owe. Your best case scenario is that the penalty is a low %.

If you challenge it and you don't come to an agreement with HMRC, then I guess you end up in court.


only some end up in court and others do not...

a two tier system is therefore in operation...


No, not for tax.

Most enquiries / investigations where tax is due end up being settled. So HMRC and the taxpayer either (i) amend the original tax return, or (ii) enter into a contract settlement where amounts are paid. If the tax has been paid late, then interest is due. In some cases, penalties are also due. How big a penalty depends on a lot of factors but your wealth / celebrity status is not one.

Sometimes HMRC and the taxpayer cannot agree on (i) whether there is a liability, or (ii) the amount of the liability. In that case they go to the civil courts (being the First Tier Tribunal in the first instance, appealing all the way up to the Supreme Court). This is not a prosecution. These cases will feature normal individuals and companies as well as "celebrities". In some cases the names of the celebrities are obvious. In other cases, they might be one of hundreds of partners in a partnership that did a dodgy film scheme and so their name won't be in the case (but will be in the newspapers). They can be really boring techy stuff or really interesting, depending on their facts (and whether you like tax).

In some situations it is clear that there has been tax evasion and it is serious enough to warrant a criminal case. So while the FTT may decide whether a high profile celebrity really is a car dealer (so they can get an made up tax loss under an aggresive tax avoidance scheme) or whether an exotic dancer can take her skimpy lingerie off her tax bill, they don't involve fraud. So your quote has nothing to do with these cases.

Relatively few prosecutions go on each year. (1,000 or so?) But they are expensive and have to be proved beyond reasonable doubt. HMRC can and do lose but prison sentences can happen if they win. I don't know exactly how HMRC chooses to prosecute someone but they seem to be more likely to be accountants/tax advisers, company directors and organised crime. Celebrities do appear in such cases (any one remember one about a former England manager and his dog?) but you don't to get too many celebrity accountants.

I have no idea if disproportionately more or less celebrities appear in the criminal courts compared to "normal" individuals. If you are bored, please do that stats.

If you want to read about the newer penalties and stuff, have a google of the serial tax avoidance regime and "failure to correct" with standard penalties of 200% of the tax due (plus paying the tax plus interest) that can go down to 100% or up to 300% plus 10% of the assets (plus tax and interest). Just to be clear, these do not involve prosecutions and so have nothing to do with your quote.

Where I think there is a two tier system is in terms of state benefit prosecutions vs tax prosecutions. But that's a different issue to what you are talking about.
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GrahamO




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PostPosted: Tue Sep 18, 2018 9:55 am    Post subject: Reply with quote

Tigger wrote:
Where I think there is a two tier system is in terms of state benefit prosecutions vs tax prosecutions.


Its always been that way - both my parents worked in what eventually became HMRC, but in different tax collection departments. My father wrote off more tax in a day, than my mother collected in a year.

My father was in VAT for which fiddling was considered okay by most people as it was anew concept, a maze of bureaucracy and the dedicated criminals hadn't tried to use scams yet.

My mother was in Vehicle Tax Enforcement and it was seen by the public as terrible to try and avoid paying your car tax. People often snitched on each other and the enforcement teams would chase people over a months car tax or even an under-declaration of vehicle weight to get a lower tax charge of about 50p saving.

There still is today a big difference between those who try to hang onto more of the money that they actually earn, and those who seek to take money out of others pockets through benefit fraud. That's as it should be IMO as the latter is outright theft. The former is trying to minimise what you pay out which is normal behaviour.
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