27/03/23

UK: HMRC opens 25 new tax fraud investigations into wealthy individuals.

As published on moneymarketing.co.uk, Monday 27 March, 2023.

HM Revenue and Custom’s Offshore, Corporate and Wealthy (OCW) unit opened 25 criminal investigations into wealthy individuals during 2022.

This number comes from multinational law firm Pinsent Masons that said the OCW unit consists of 500 staff with a range of criminal and civil powers.

The unit only reserves criminal processes for serious investigations.

The OCW unit is part of the HMRC’s Fraud Investigation Service (FIS) that was established after the Panama Papers leak in 2016.

The Panama Papers were 11.5 million leaked documents that detailed financial and attorney-client information for more than 214,488 offshore entities.

The leak came from former Panamanian offshore law firm and corporate service provider Mossack Fonseca.

The leak showed the way in which the rich exploited secretive offshore tax regimes.

The FIS brief is to “target deliberate, high-value tax evasion, fraud and money laundering”.

HMRC labels an individual to be wealthy if they earn over £200,000 each year and are therefore a major part of the OCWs focus.

Investigations from the OCW have included BHS owner Dominic Chappell, who received six years of imprisonment in 2020 for tax evasion.

Also the current investigation into Bernie Ecclestone former chief executive of Formula One (F1) Group, who will stand trial later in 2023 following a complex and worldwide criminal investigation.

Pinsent Masons partner Andrew Sackey and former head of OCW explained that the unit is playing a main role in FIS strategy to enforce HMRC rules and tax investigations.

In 2009/10 HMRC oversaw 165 prosecutions which protected £150m in tax revenue, in 2019/20 the number of prosecutions increased to 573 and the revenue protected increased to £5bn.

Sackey said that HMRC is growing its use of data-sharing between both government agencies worldwide and engaging in strategic public-private partnerships.

Additionally, in 2022 HMRC attended two major summits between the J5 group – a coalition of the tax enforcement authorities of the UK, US, Canada, Australia and Netherlands – and dozens of large financial institutions worldwide.

Sackey added: “As the name implies, OCW is the spearhead for HMRC’s drive to tackle the most complex and impactful cases of tax evasion and fraud. It is aiming to secure prosecutions against corporates or wealthy individuals whose deliberate actions are believed to have defrauded the public purse of hundreds of millions of pounds.

“The Treasury consistently provides HMRC with significant funds and resources each year to investigate a range of serious non-compliance including the suspected conduct of high net worth individuals’. If the amount of tax revenue it protects through these investigations keeps rising, the government is likely to continue to invest in this high-end form of tax enforcement.

“HMRC and its counterparts overseas are making it increasingly likely that tax irregularities, evasion and fraud will be detected. The amount of data shared between them each year is growing substantially – as it their ability to process and understand that data to identify enforcement opportunities.

“As financial institutions are increasingly brought into that fold as trusted partners, that process is only going to accelerate.”