The Redknapp case is another embarrassment for HMRC and the City police.
Let's get the obvious point out of the way: Redknapp has been found innocent. End of story.
Now let's state something else that should be obvious: if you're going to prosecute you don't do so when there's doubt as to the tax status of a payment, as there was in this case. That's daft. There was always going to be enough doubt to find these two not guilty. So the prosecution was unwise.
You prosecute on the basis that the taxpayer (and I'm not now referring to the Redknapp case) has signed a false declaration. They are the elephant traps that the tax system creates for that very purpose.
Let's take two examples. The first is from the tax return. When a person submits their return they agree that:
The information I have given on this tax return and any supplementary pages is correct and complete to the best of my
knowledge and belief
If the return was not complete they have committed an offence. So you can prosecute. You don't debate whether the income was taxable. You find unambiguous missed entries on the tax return and prosecute them.
And if the peson who is being prosecuted has signed a previous declaration of full disclosure they'll almost certainly have said this:
I HEREBY CERTIFY that to the best of my knowledge and belief, I have made a complete disclosure to you of:-
1 all banking accounts (whether current or deposit, business or private), all savings and loan accounts, deposit receipts, and Building and Co-operative Society accounts:-
On the reverse it states:
If at some later date it is found that the statements were materially incorrect HM Revenue & Customs will take a serious view of the false completion of the certificate and any loss of tax which may have arisen as a result.
and finally:
False statements can result in prosecution.
You can prosecute on that.
So why prosecute on something else? Can't HMRC and the police even get the basics right on this? If they diod the number of cases they could bring would be high. But they don't so the deterrent effect does not exist. Why not?
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I thought the most striking aspect of this case was that it allegedly cost £8m to bring. Whatever the pros and cons of the individual case, the costs of the investigation seem out of all proportion to the amount at stake. While I am not suggesting that people diddling HMRC of small amounts should be ignored, there has to be some cost benefit analysis of whether the benefits of pursuing someone are outweighed by the costs. In the Redknapp case, HMRC should surely have paused for thought when they lost the case against Peter Storrie last year, who was also connected to Portsmouth FC.
The overall impression created by this case is that HMRC are overfunded and have no concern for wasting taxpayers money (something reinforced by their comment that they have “no regrets” about bringing the prosecution). It will certainly make it much harder for HMRC to ask for additional funding after what has frankly been a very public shambles.
As I have said before, no prosecution works on direct cost benefit just as no murder trial seeks to bring victim back to life
It’s about deterrent
That’w why he was picked
they got it wrong
But your logic is just about saying sweep it under the carpet. Now why would a Jersey lawyer say that?
I’m not saying sweep it under the carpet. What I am saying is that is you are a public body that claims to be short on funding you should be very careful before bringing a high profile case, and then, if you lose the case, you should not say you have “no regrets” about effectively wasting £8m of public money.
And if you bring a case as a deterrent, you have to make bloody sure you win.
You say “they got it wrong”. My point is that not only did they get it wrong very publicly, but, if they are short on resources, then by definition in choosing to prosecute this case they must have not prosecuted a large number of people who they otherwise could have done. So the loss to the public purse will be many times £8m.
It’s not about sweeping things under the carpet: it is about trying to use the HMRC budget to raise the maximum amount of tax for the benefit of the country.
It did not allegedly cost £8m to bring this case – it cost £8m to allegedly bring this case AND the previous two cases together. Soundbites that quote numbers are notoriously easy to misquote.
Secondly, I suspect that HMRC did not actually get bad value for their £8m. The statement that HMRC were able to make – in the glare of publicity on the steps of the court – that people who evade tax by using offshore tax havens had better contact HMRC before HMRC contact them, might well bring in a lot more than £8m. Mr Redknapp is not guilty of course let me hasten to add.
Prosecuting in every case would be disproportional in my view.
There will be some cases where the lack of disclosure (on a tax return) was due to a mistake.
The situation in respect of a declaration of full disclosure is a bit different as you would have expected their to be a fuller consideration and enquiry and investigation made by the declarant.
Successful prosecutions have a deterrent effect I think, so this should be a factor in deciding what and how to prosecute, and which cases.
A tiny proportion will ever be prosecuted
But they have to get it right
Which is why the elephant traps are there
A little research project for you….
How many prosecutions of directors have their been for failing to file accounts for UK Companies?
I have some years ago seen one of these, but the case was stopped by using a statutory defence.
I thought they used to prosecute 0.1% some years ago, on a random sample basis.
I’ve done that
See 500,000 missing companies report
There are two remedies of CH for failure to file, the civil penalty and prosecution of the directors.
Your report principally addressed the civil penalties.
I think that prosecution, and publicity would encourage compliance.
I also looked at prosecution rates
They have stopped altogether in Scotland
“So you can prosecute. You don’t debate whether the income was taxable”
Errr, I think that would be a pretty important part of the decision to prosecute. You don’t prosecute if the taxpayer has omitted to declare non taxable income.
The tax return is right in that case
So of course not
Some is very easy to determine….like interest
It’s not quite correct to say Redknapp was found innocent. He was found not guilty.
That’s not the same thing. It means that the jury were not convinced beyond reasonable doubt about one or more ingredients of the prosecution’s case.
I think it would be more accurate to say that the jury considered him not guilty of the charges.
Their is no better way to prove your innocence of a charge than to be found. It guilty by a trial in a court when judged by your peers
I think you are spot on here RM. But I also agree with Roger,if you are going to spend £8 Million you had better be sure you are going to win. I think HMRC are a laughing stock- this is less likely, not more likely to cutail evasion. HMRC – lions led by donkeys.
By the way we know Harry very well down here in Portsmouth…………..