Two businessmen were jailed on Wednesday after pleading guilty to lying about cash they hid outside the UK, in the first prosecution tied to an amnesty to allow voluntary disclosure of unpaid tax on offshore bank accounts or assets.
Roderick Smith and Stephen Howarth , who ran Goldlogic Control Systems, a Manchester-based computer technology company, evaded about £500,000 in income tax over a six-year period. Smith had voluntarily disclosed only one of 12 offshore accounts he controlled.
As they also note:
The investigators found the balance was “siphoned off into the offshore accounts of five shell companies registered in Mauritius and the Isle of Man that were created by the directors solely for the purpose of tax fraud”.
Smith's initial disclosure was prompted by the Offshore Disclosure Facility campaign in 2007, which included a 10 per cent tax penalty.
The tax authority said its follow-up work for the campaign had recovered more than £103m in unpaid tax.
Three observations follow.
First, so much for the Isle of Man being clean. Yet again here they are in the middle of tax haven abuse.
Second, following the pattern HMRC seem to be exposing (but which is undoubtedly not try) tax evasion appears to be a north western phenomenon.
Third, £103 million has been collected but mysteriously it was the dodgy trader and not the high net worth individual who has been tackled.
I fully support tackling tax evasion and prosecutions. But the feeling of bias in HMRC's behaviour remains very strong indeed, and that is unacceptable.
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Cowards fry small fish.
Of course if my earlier comments are totally in appropriate and knowing that HMRC read your blog, the next naming and shaming will be someone working in the financial sector in the City of London! Perhaps not?
With my tongue firmly in my cheek….I’m only surprised that HMRC didn’t supply ginger wigs and moustaches before taking any photographs!
I could be completely and utterly wrong and the next naming and shaming will be of a tax credit claimant, Mrs O M Hubbard, a single mother. The said claimant lives in a £2 million mansion with three spare bedrooms, all funded by Islington social services. She was overheard complaining about the “bedroom tax”. Mrs Hubbard had said that she was not worried about the “Mansion tax”, because she knew the Conservatives and their supporters would make sure that this was dead in the water. It was far too difficult and complex to tweak the current Council tax collection system to collect this tax.
Of course it is apparently a doddle and administratively inexpensive to collect child benefit via the tax system.
Could it be that it’s mainly “dodgy trader” types that dodge tax by crude concealment? HNWIs and multinationals tend to be better (and more expensively)advised and use more sophisticated methods that are not unlawful. HMRC are not perfect and no doubt like a soft target, but with the best will in world they can only prosecute those who actually break the law – not those who weasel their way round it
True
But the LDF was for tax evaders
£103 million has been collected
That’s. lot of £25k’s
So I don’t buy the argument
I’d highlight two points, Richard. Firstly, was the North West not one of the regions that HMRC announced some months ago they were going to target? I seem to remember that they produced a list that went something like: takeaway food establishments and taxis in the East Midlands; builders and ballonists (I joke) in the North East, and so on. So I assume this is the result of whatever HMRC inspectors cracked down on in the NW.
The second point is a bit more interesting, I think. Why only name and shame and target relatively ‘low value’ wrongdoers? I think this may well be related to whether or not the custom and practice that now exists within HMRC (i.e. the culture) recognises you as a ‘customer’ or not, and what value they attach to that label.
It’s worth briefly recalling that in the context of government and public services in the UK the transition (as it were) of people from ‘citizens’ to ‘customers’ was a trend that first emerged in the the early 1990s, when there was much discussion about whether or not the public – who may have been traditionally referred to as clients (as in, a client of social services or probation) or patients, as in the NHS – should instead be considered customers rather than citizens. In a nutshell, the argument of the supporters of this view was that if regarded as customers public services would then become more ‘customer focused’ or ‘customer centric’ and, as if by magic, public services would improve, much as the services of banks and supermarkets have improved by employing a similar philosophy (I joke again, of course).
This largely ideologically driven debate was settled in favour of members of the public being viewed as customers instead of citizens during New Labour’s first two terms in office. The result was that regardless of the type and nature of the relationship a person has with a public service (e.g. taxpayer, patient, benefit claimant, etc) we are always and everywhere supposed to be considered ‘customers’.
In practice however, what we’ve seen is that some customers are better than others. Or perhaps it would be more accurate to say, some customers are more ‘real’ than others. In the retail sector they’d probably be referred to a more ‘valued’ customers.
Now I’m sure that all HMRC staff are told to treat all taxpayers as customers. But in reality I’m pretty sure we’d find that high net worth individuals, and big business (i.e. all those ‘customers’ of the Large Business Service within HMRC) are considered – and very importantly treated – much more as ‘real customers’ than some small scale business person in the NW – or indeed any other part of the UK.
As any of us who have ever ventured into a high end retail store will know, if you don’t look the part then the service you receive and attitude of staff to you differs considerably to the service and attitude someone who looks wealthy receives. Ultimately then, those who have been targetted and named and shamed in the North West pay the price for being less ‘valued’ customers of HMRC than the likes of Vodaphone, and presumably not having the benefit of an HMRC Customer Relations Manager to make a case for treating them not too harshly.
ok so its small, but its a start isnt it? rather than moan about it I thought you might encourage it with a view to more frequent disclosures.
isnt it also great that the IOM and Mauritian route can be discovered and prosecuted, whilst automatic information exchange might make it easier, doesnt this reveal the untruth that the channel islands are untouchable in this respect?
I welcome the exposure of tax evasion
But not in a way that might suggest systemic social bias by HMRC
Surely the point of this one was that one of the guys had “taken advantage” of a disclosure facility, but then didn’t disclose.
I think HMRC will make great hay from this one & the, rather obvious, point for customers & agents is, if you’re going to cough, for god’s sake cough !
This guy seems to have thought, v stupidly, that if he admitted to a small instance of wrong-doing he could thus get some kind of HMRC blessing that would cover all the bigger amounts remaining offshore & undeclared. Madness !