As the FT Adviser notes:
Christos Charalambous completed more than 6000 self-assessment tax returns for clients, which included fictitious expenses claims in order to increase the tax repayments due.
As he knew, the repayments would be automatically paid without question being asked. That is HMRC policy. The accountant in question is now in jail, but that’s not the key point. I am, and I know many HMRC staff are, utterly baffled by the instruction that they must on all occasions make payments to those who ask for refunds of tax and only ask questions later.
There are two reason for the bafflement. First, as this case proves, this is an open invitation to defraud HMRC.
Second, as those staff well know, their capacity to ask questions later has always been limited, meaning many get away with the fraud. And because of the massive cuts HMRC is imposing on its staffing that capacity is now being reduced still further.
And you then wonder why I think the tax gap is £120 billion or thereabouts, £70 billion being made up of tax evasion (of which false reclaims are a part) and £28 billion is unpaid tax debt – of which the requests for repayment of false over claims are a part.
Have no doubt – as the recession develops HMRC will be increasingly seen as a soft touch for easy money if this policy continues.