Report needed re possible fraud in Ireland?

I am acting for the executors of someone who died resident and domiciled in Ireland.  The deceased owned property in Australia as well as the UK and Ireland.  My work is confined to two aspects: (a) preparing UK IHT forms and (b) co-ordinating the work being done by professionals in Ireland and Australia.  I have grounds for believing that one of the beneficiaries who is also one of the executors will not make a full declaration of gifts that they have received from the deceased prior to death and thus will pay less Irish CAT (gift/ death tax) than they should.  The correct amount of UK IHT and tax in Australia will be paid.  I have raised my concerns but have been told that whilst Ireland is not Greece, "We do things differently here". 

Do I need to make a report to the UK, the Irish authorities, both or neither?

Comments

UK

The Black Knight | | Permalink

I believe the regulations require the reporting of a suspicion, wherever it occurs, if it is an offence in that country.

I would only report it to the UK, unless you have an office in Ireland and come under their MLR rules.

davidwinch's picture

Report to SOCA in the UK

davidwinch | | Permalink

If the information on which your suspicion is based has come to you in the course of your business operation in the UK then your report should be to SOCA in the UK.  You have no obligation to report to overseas authorities.

Incidentally, money laundering is defined by reference to "criminal conduct".  For this purpose "criminal conduct" is defined by s340(2) PoCA 2002 as follows:

Criminal conduct is conduct which —

(a)  constitutes an offence in any part of the United Kingdom, or

(b)  would constitute an offence in any part of the United Kingdom if it occurred there.

David

Criminal conduct

Tomazaan | | Permalink

David

Thank you for this.  May I ask for clarification?

If I were dealing with a UK only based estate (ie English domiciled deceased and English property) , I would not have a problem.  The gifts which I don't think are going to be reported would be exempt from UK IHT as they would be classed as normal gifts out of income.  However Ireland does not appear to have a similar exemption and all gifts (over and above a small gifts exemption) should be reported.  So I am dealing with what is an offense in Ireland (if my suspicions are correct) but the same behaviour would not be an offense in the UK because our tax laws are different.

So do I need to report?

davidwinch's picture

Interesting question

davidwinch | | Permalink

The statutory definition of "criminal conduct" does throw up issues where conduct is legal inside the UK but illegal where it occurs, or vice-versa.

So for example if I operated a commercial raffle in the UK I would need to comply with certain requirements.  If instead I operated the same raffle in, say, Bermuda and those requirements do not apply there, then is what I am doing "criminal conduct"?  The original PoCA 2002 provisions have been amended somewhat to try to deal with that issue.

To take a converse example, if I move £1 million (of entirely legitimate funds) from country X to country Y I may be breaking exchange control laws in one or both of those countries.  But if I did the same from, say, the UK to France (where there are no laws prohibiting movement of legitimate monies) then it would not be an offence.

So is the transfer from country X to country Y reportable?  The consensus view seems to be that it is not reportable to SOCA by a business operating in the UK because it does not fall within the definition of "criminal conduct"?

(Of course if the £1 million were, say, proceeds of drug trafficking - and I knew or suspected that to be the case - then moving the money from the UK to France would be a money laundering offence contrary to s327 PoCA 2002.)

Now, what of your case?  There are two ways to look at this.  One is to say that the particular transactions, had they occurred in the UK, would not be reportable to the tax authorities here.  That suggests this is not a reportable matter.

The other view is that tax evasion is "criminal conduct" in the UK and what you are suspicious of is tax evasion in Ireland.  That suggests that this should be reported.

There is some support for each view.  Personally I take the second approach and would report it.

However if you take the first approach and decide not to report it then I would recommend you make a confidential file note of the facts known to you, your suspicions, your interpretation of the law and your decision and reasoning.

David

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