Tax evasion and client account monies

This is perhaps a very obvious point, but I was asked recently about monies (a cheque) from a client which had been deposited into the firm's client bank account and was to be forwarded to pay HMRC in respect of past tax liabilities which had been evaded.

The question was, "Do we need consent from SOCA to pay the money over to HMRC?".

The answer is simple, "Yes".

The monies in question could not be shown to be free of any connection with the tax evasion in which the client had engaged.  The accountant's suspicion was that the previous tax under-declarations did not arise as a result of an innocent error or omission and so this was a case of suspected criminal tax evasion (although HMRC were not intending to prosecute).

So the accountant knew or suspected that the monies were tainted by criminality (and so were 'criminal property') and the accountant's transfer of the money (even to HMRC) would amount to a money laundering offence by the accountant under s327 PoCA 2002 in the absence of consent from SOCA.

David

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b.clarke's picture

Problem of strict liability

b.clarke | | Permalink

It's crazy. Even paying the money to HMRC results in an offence. The law is too unambiguouly drawn.

Would the situation for the accountant have been the same if the cheque had been addressed to HMRC and he had not paid it into his clients bank account?

 

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

Again it all comes down to what the accountant "suspected".

How you measure "suspicion" - and how you can decide what another person "ought to have suspected" is beyond the realms of reason.

 

 

davidwinch's picture

Where the cheque is made out to HMRC

davidwinch | | Permalink

My advice would be that consent should be obtained where the accountant receives from his client a cheque made payable to HMRC and passes it on to them (if the accountant suspects that the client has committed a criminal tax evasion offence).  The position is not free from doubt and so my advice is based on a "safety first" option from the accountant's point of view.

One could have a nice legal debate about whether consent is, or is not, required in relation to a cheque made out to HMRC.  A cheque is, in legal terms, a "thing in action" and is therefore (for the purposes of PoCA 2002) "property" s340(9).  Does the cheque "constitute or represent" a person's "benefit from criminal conduct" for the purposes of s340(3)?  Well probably, if that person has been engaged in criminal tax evasion.  So, if the accountant knows or suspects this to be the case, the cheque will be "criminal property" in the hands of the accountant.

Does the accountant risk committing a money laundering offence by handling the cheque?  Well he may be 'in possession of criminal property' contrary to s329, or his physical despatch of it to HMRC might amount to a "transfer" contrary to s327, or he might be regarded as having become concerned in an "arrangement" which facilitates his client's "use" of criminal property contrary to s328.

So, in my view, the accountant would himself commit a primary money laundering offence if he were to forward his client's cheque to HMRC without appropriate consent from SOCA (unless there were extenuating circumstances).

But let's think about how this would work in a typical case.

Suppose HMRC open an enquiry into your client's tax affairs.  As matters progress you form the view that your client has dishonestly and deliberately evaded tax (by which I mean knowingly under-declared his liability to tax of one sort or another and obtained a tax 'saving' as a result).  Then clearly at that stage you will make a report of your suspicion to your MLRO or to SOCA under s330.

At a later stage (probably) the client agrees to make a payment to HMRC in relation to the enquiry and he gives you that payment (either in the form of cash - banknotes - or a cheque made payable to your firm, or a cheque made payable to HMRC).  At that stage you are going to make a (second) report to your MLRO or to SOCA requesting consent to make the payment to HMRC.

That second report is going to be a simple task because you will simply refer back to the first report and add the information about the payment and tick the 'consent required' box.  Not too onerous!

David

cymraeg_draig's picture

Just a thought - OK I'm going to nit pick

cymraeg_draig | | Permalink

One could have a nice legal debate about whether consent is, or is not, required in relation to a cheque made out to HMRC. A cheque is, in legal terms, a "thing in action" and is therefore (for the purposes of PoCA 2002) "property" s340(9). Does the cheque "constitute or represent" a person's "benefit from criminal conduct" for the purposes of s340(3)? Well probably, if that person has been engaged in criminal tax evasion. So, if the accountant knows or suspects this to be the case, the cheque will be "criminal property" in the hands of the accountant.

 

Posted by davidwinch on Sat, 09/04/2011 - 09:47

 

If the client pays money to the accountants account, or if he hands over cash, then it is "proceeds of crime". 

However, a cheque, made payable to HMRC, could be argued not to constitute "proceeds of crime" as a cheque has no value.  A cheque is merely a promise that the client's bank will pay £X to HMRC upon presentation of the cheque.  So, technically, no offence occurs until or unless HMRC cash the cheque.

 

 

davidwinch's picture

Nice legal arguments

davidwinch | | Permalink

C_D

One can look at a cheque in different ways, I suggest.

The cheque is (I think you would agree) something which falls within the definition of "property" in s340(9).  It is a promise evidenced by a document (the physical cheque itself).  The money promised represents (in whole or in part and whether directly or indirectly) the proceeds of crime.

So one could argue that the accountant's physical possession of the cheque (the piece of paper) is contrary to s329.

I am not convinced that that is a strong argument.

Nor am I too sure that posting the client's cheque to HMRC amounts to a "transfer" within the meaning of s327.  Although I suppose if one went to the bank with it and paid it in across the counter with an HMRC paying-in slip that probably would amount to "transferring" the money.

The position is much more clear if the cheque is made out to the accountant and paid into (and then out of) his firm's client bank account.  That clearly would involve "transfer" of the money.

I think of a "transfer" as an operation involving a bank rather than one involving a postman!

I do think that the greatest danger is that the accountant has entered into or become concerned in an arrangement which facilitates the use of his client's criminal property (to settle a debt due to HMRC).

The famous case of Bowman v Fels [2005] EWCA Civ 226 dealt with the meaning of an "arrangement".  It concluded that the ordinary pursuit of litigation was not within the meaning of an "arrangement".  That case dwelt at length on issues concerning legal professional privilege at common-law and the solicitor's duty to the court.  It concluded that conduct of litigation was not an "arrangement".

But it also concluded that an "arrangement" was not limited to an arrangement that had some money laundering purpose or objective (see para 98 of the judgment).

If one were to argue that the accountant was not involved in an "arrangement" when forwarding a cheque to HMRC that argument would have to be made on different legal grounds from those successfully advanced in Bowman v Fels.

As I said, it is not beyond doubt - but my advice would be to get the consent.

David

cymraeg_draig's picture

But ..................

cymraeg_draig | | Permalink

..................  - but my advice would be to get the consent.

 

Posted by davidwinch on Sat, 09/04/2011 - 10:53

 

Agreed - but (there's always a "but") - if for whatever reason the accountant failed to obtain consent, probably by not realising it was required (they dont all read AWeb) then I think the arguement that he hadnt actually handled the "proceeds" of crime would have a good chance of standing up in court.

In fact, where a cheque is made payable directly to HMRC the accountant, by sticking it in an envelope and posting it, is acting as a post boy, nothing more.

I really think this is one of those cases where it depends on which judge you get, and whether he had a row with his wife before giving his ruling.

 

Ble*ding h*ll

The Black Knight | | Permalink

We will be banned from helping little old ladies over the road next.

Then all cheques to HMRC are potential criminal property ?

What if there is an additional penalty caused by awaiting consent ? or can we ask as HMRC officer to grant consent, does not the legislation allow the report to be made, to a Constable or Vat officer ? (now all the same HMRC higher officers)

Maybe, if we ask that the cheque should not be banked until consent has been granted and the cashing of such a cheque be treated as deemed consent.

This is definately one that would never have crossed my mind in doing the right thing.

davidwinch's picture

Cheques to HMRC

davidwinch | | Permalink

I am suggesting only that where criminal tax evasion is suspected then consent be obtained.  I think consent should normally be received from SOCA within 2 or 3 (working) days.

Is that really going to cause problems?

David

Yes !

The Black Knight | | Permalink

these things are always run to the deadline, because clients leave everything to the last moment anyway, and especially those whose affairs are not in the best of order.

Perhaps we should just not handle the cheque, post it anonymously, or get the client to send it direct. Would save an awful lot of form filling.

Is it a criminal offence to tell the client it might be deemed criminal property (depending on what HMRC think they were thinking off when they missed a source of income from their tax return) therefore we are not allowed to touch it ?

Donald2000's picture

Accountants are not police, or legally qualified

Donald2000 | | Permalink

I think this is all getting ridiculous, from what I have been reading. What they are seeking to do is to criminalise the accountants or bind them up with rules the like of which MPs would have no comprehension.

This is why I dont practice as an accountant any more. I dont want to play these games of who is likely to be a gangster; thats the role of the police or people who are legally qualified.

I would rather give my work away pro-bono than sign up to those ridiculous rules which are binding the accounting profession down. Accountants are not in a position to know who are criminals or not. Meanwhile the banks are getting away with tax avoidance on an epic scale. Its all rubbish and nonsense.

The money laundering rules should be instantly reviewed and accountants should be taken out of the scope of the legislation; unless you want to give all accountants a sheriff badge and a six gun.

Doh........

 

stepurhan's picture

Returning stolen property?

stepurhan | | Permalink

If the suspected offence is criminal tax evasion and the cheque is going to HMRC, isn't this a case of returning "stolen" property? To take it outside the tax realm, if I defrauded somebody (say, by getting them to pay me for something that didn't exist) and then had a crisis of conscience and elected to pay them back, would that still constitute a money-laundering offence, even though the only criminal property involved is the money I'd actually be returning to its rightful owner?

carnmores's picture

well said Donald

carnmores | | Permalink

the whole situation is totally out of control - every MP who is an accountant or a lawyer should be given a weekly summary of this nonsense by AWEB

billgilcom's picture

Oh dear

billgilcom | | Permalink

I suppose there is always the risk that the client might get prosecuted but at the point that the cheque is "transferred" there shouldn't be any prosecution in anybody's mind (in the normal run of things).

Oh well why would I want my client's money in my bank account anyway. Much better for them to send it direct to the investigator. Of course David did say at the outset that it was arguable.

davidwinch's picture

Getting the client to pay direct

davidwinch | | Permalink

I do think there is a lot to be said for getting the client to make payment direct to HMRC.  Certainly I am always concerned when I hear of accountants putting money through their firm's client account because that is the 'text book' money laundering problem area.

Perhaps my anxiety goes right back to my childhood.  One of my earliest memories is of walking down the street holding my mother's hand and seeing a sweet which had been dropped on the pavement.  I bent to pick it up but my mother said, "Don't touch that - you don't know where it's been!".  She was right of course and oddly prescient - this was decades before the advent of the Money Laundering Regulations!

The principle is sound though - don't touch it if you don't know where it's been.

David

Old Greying Accountant's picture

Does it work the other way...

Old Greying Acc... | | Permalink

... i.e if HMRC send a refund to your client account, when you "should" have suspected the client had, for example, overstated expenses or under declared income?

davidwinch's picture

Different tests

davidwinch | | Permalink

Different tests apply (i) in respect of the principal money laundering offences (when you are yourself involved in an arrangement , or any handling, concerning monies or assets which are derived from crime) and (ii) in relation to failing to report (where you fail to report a suspicion that someone else is committing a principal money laundering offence).

A principal money laundering offence can be committed by a person who knows or suspects that the monies or assets are derived from crime and becomes involved with that money or asset (by handling it, possessing it, transferring it, concealing it, using it, etc., etc.)

An offence of failing to report can be committed by a person in the 'regulated sector' who knows or suspects, or has reasonable grounds to suspect, that someone else is committing a principal money laundering offence.

Obviously if HMRC send a refund to the accountant which he knows or believes has been generated by fraud or theft (as distinct from innocent error) the accountant will return it to HMRC (because to dishonestly retain it would be a criminal offence under s24A Theft Act 1968).  But strictly speaking the accountant should obtain consent from SOCA to return the money if he knows or suspects the money to be proceeds of crime.

But since we are there dealing with a principal money laundering offence by the accountant himself the alternative of "reasonable grounds to suspect" is not relevant.

It helps if you keep in mind the distinction between the money laundering offences which you commit (or are at risk of committing) yourself and those which you suspect, or have reasonable grounds to suspect, may be committed by others.  If you are handling money (or assets) yourself then it is you yourself who are at risk of committing a money laundering offence (even though you did not commit the original crime which generated the proceeds).  OK?

David

billgilcom's picture

Wow - so we have to blame

billgilcom | | Permalink

David's mother both for the legislation and his bent for the MLR.

Gerard Murray's picture

Paying the Revenue Through the Accountant's Client Acount

Gerard Murray | | Permalink

Best and sound advice is surely to have the client make the cheque payable to HMRC and thus by-pass the accountant's client bank account. I once had a tax investigation case, in which we had started to act only at the outset of the investigation. As the investigation progressed it was apparent that the Revenue believed that our new client had other undisclosed bank accounts. The client was adamant that he had made full disclosure of all his bank accounts. So we had a stand-off. I went to see the Inspector and out it to him that unless we resolved this mater the entire investigation was going nowhere except to the Commisioners. He agreed and let me have account number and sort code of the account that he believed that our client was not disclosing. He also told me that the account had been used to pay HMRC in the past. You can probably guess what is coming.  

I appraoched the bank with an authority duly signed by the client and received the response that there was no such acount in our client's name. I followed this up and informed the bank that the account had been used to pay HMRC and received the reply that the account was the client account of our client's former accountant, who substantiated this. The moral of the story is obvious!  

carnmores's picture

so

carnmores | | Permalink

a client account is no longer a client account ....brilliant

cymraeg_draig's picture

Dumb

cymraeg_draig | | Permalink

 He also told me that the account had been used to pay HMRC in the past. You can probably guess what is coming.

Posted by Gerard Murray on Mon, 11/04/2011 - 17:01

 

 

Which really serves to demonstrate how stupid some tax inspectors can be - and how desparate to find an excuse to harass taxpayers. 

The name of an account holder is something which HMRC have always been able to check on demand - so either this particular inspector was too idle to do so, or too dumb to carry out the most basic of checks. As a result of his blatant incompetence your client was subjected to unnecesary distress and expense - I hope you pusued them for compensation and costs, and filed a complaint against the inspector. 

 

  

carnmores's picture

how delightfully politically incorrect

carnmores | | Permalink

i shall go to sleep with a smile tight - doubtless Becky will have removed it by the time i awaken a year older  N

billgilcom's picture

Mind you

billgilcom | | Permalink

It also reminds me of the odd taxpayer or two who have paid their duties out of the previously undisclosed account.

Caber Feidh's picture

Perhaps not so dumb

Caber Feidh | | Permalink

I do not have C_D's expertise in official stupidity. However, I think it would be unwise to assume that all inspectors are stupid. Why should an inspector not request information about an account holder even though HMRC have always been able to check this on demand? You never know what you might discover from a careless response. And why not avoid drawing attention to the fact that HMRC can check for themselves?

donkey

davidlchapman | | Permalink

what a brilliant photo! i think i will send this on to all my clients.

 

CIS refunds direct to us -v- client pays us?

ugdiv | | Permalink

We have a new CIS client who wants to have his CIS tax refunded to our account. If it turns out that he has been 'fiddling',  would I be handling proceeds of ML?  And what if the refund was to *his* bank account, and he paid me after he received his CIS refund, would that also be the proceeds of ML?

I haven't seen him yet, but in my experience builders seldom keep perfect records.

cymraeg_draig's picture

mrbdunsmore

cymraeg_draig | | Permalink

And why not avoid drawing attention to the fact that HMRC can check for themselves?

 

Posted by mrbdunsmore on Tue, 12/04/2011 - 01:19

 

Because they are required to be "open & honest" in their dealings with taxpayers - not devious and underhanded. 

Further, by knowingly causing distress, fear and expense to the taxpayer by recklessly or maliciously failing to take all reasonable steps to first ensure their accusations were justified, they are in fact demonstrably guilty of harassment (an imprisonable offence).

Where a simple check could and indeed should have been carried out and HMRC fail to do so there is a prima face case for damages under s3 Protection from Harassment Act.

It is merely a pity that more accountants and clients dont pursue damages when wrongly harassed by HMRC, and I dont mean through the HMRC complains process, which is designed to fob people off, I mean through the courts.

davidwinch's picture

Imagine this

davidwinch | | Permalink

Perhaps it helps if I illustrate a point with a surreal example.

Imagine you have an ex-client who owes you £600 in fees.  One morning in your office your hear a commotion in the street outside.  The burglar alarms are going off at the bank across the road.  Looking out of your window you see two blokes in masks and tee-shirts with horizontal black and white hoops running out of the bank.  One is carrying a bag marked "SWAG" from which are floating out occasional £50 and £20 notes.  You recognise this man - he is the ex-client.

Sure enough he comes running breathless into your office and pulls £600 out of the SWAG bag.  "Here's the money I owe you," he shouts before running off pursued by cops waving truncheons and blowing whistles.

Now where do you stand as regards money laundering?

Well clearly you will suspect that he (and his mate) are in possession of 'criminal property'.  That information has come to you in the course of your work in the 'regulated sector' (since you met him in your office with the SWAG bag) and so you are going to need to report your suspicion under s330 PoCA 2002 / MLR 2007.

If you are in Scotland you will also make a 'serious organised crime report' under s31 Criminal Justice and Licensing (Scotand) Act 2010.

But what of the £600 still held in your trembling hand?  Have you acquired 'criminal property' contrary to s329 PoCA 2002 and so committed a primary money laundering offence yourself?

No, you are in the clear because you acquired the 'criminal property' for 'adequate consideration' (the work you did and billed) and so s329(2)(c) prevents your acquisition being a money laundering offence.  Whew!

Turning to the CIS guy.  The problem only arises if you suspect there has been dishonesty rather than mere incompetence or neglect, so that a criminal offence has led to the tax 'saving'.

Even if you do suspect dishonesty you will not commit a money laundering offence yourself simply by receiving payment of your (sensible!) fees.

The issue we started this thread with was client account money (so, not payment of the accountant's fees) in circumstances where there had been criminal tax evasion (so a criminal offence had occurred, not merely neglect or incompetence).

Does that put your mind at rest a bit?

David

ugdiv

The Black Knight | | Permalink

I think a potential client ( that you have not met yet) wanting to use your client account for CIS refunds, !?

Should perhaps start alarm bells ringing.

cymraeg_draig's picture

Why ?

cymraeg_draig | | Permalink

I think a potential client ( that you have not met yet) wanting to use your client account for CIS refunds, !?

Should perhaps start alarm bells ringing.

 

Posted by kalden on Tue, 12/04/2011 - 10:56

 

I don't see why it should.  It's very common for subbies to have refunds claimed by the accountant, who then deducts his fees before passing on the balance to the client.  The logic being that (a) the accountant knows he will get paid, and (b) the client knows the accountant will chase HMRC for the refund (to get his fees paid).

Why would that start alarm bells ringing ?

 

 

And

The Black Knight | | Permalink

presumably will make sure there is a refund so his fees can be paid ? Independence ?

Just unusual for the client to request this especially before a meeting, however I do take your point that there may also be nothing wrong as well, and everyone has different views on what would put them on alert.

even if the alert is that you will not get paid until HMRC make a refund ! lol

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

And presumably will make sure there is a refund so his fees can be paid ?  

Posted by kalden on Tue, 12/04/2011 - 16:24

 

I've yet to meet a sub-contractor in the building trade who doesnt receive a refund.  The way the system works you can virtually guarantee a £1k refund before even thinking about claiming expenses etc.

However, your comment does underline again a serious issue under MLR, namely "suspicion".  You say it might make you suspicious, whereas it definitely wouldnt make me suspicious. Would I be risking prosecution by not filing a report - or are you wasting everyones time by filing unnecesary reports? 

I keep0 returning to the fact that "suspicion" is a totally subjective concept - and therefore it is unacceptable for a court to say what anyone SHOULD have suspected.

 

Donald2000's picture

They want everyone to be paranoid and suspicious

Donald2000 | | Permalink

I think contributors are misssing the point somewhat. Of course they want you all to be paranoid and suspicious. It saves them doing that bit of the job themselves. Whats happening is that you are being used as an untrained police force, tlo sniff out wrong-doers. It does not matter that they are wrong doers, as long as you sniff them out. In other words they are using accountants as stool-pigeons, or go-betweens.

No experienced police officer would have trouble with suspicious behaviour. They have been trained to know what it is; they have a criteria and it is in the police manual. The trouble with using accountants is that they have limited kniowledge of law.

While HMRC are persuading you all that you need to report suspicious activity, there has been a recent report that a certain big bank has been hiving off PFI profits into an offshore tax haven. Now that, I would have thought, is suspicious enough for everyone. But because its done by a bank using legal means of tax avoidance, it does not matter. Meanwhile Little Johnny with his black economy construction firm has to report to his accountant that he has dirty money.

Someone, as Nick Cotton would have said, is definitely having a giraffe.

 

Regards, Donald.

 

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

No experienced police officer would have trouble with suspicious behaviour. They have been trained to know what it is; they have a criteria and it is in the police manual. The trouble with using accountants is that they have limited kniowledge of law.

 

 

Posted by Donald2000 on Tue, 12/04/2011 - 19:40

 

I certainly have more legal knowledge that any police officer - and I have trouble defining what is "suspicious".

Looking at the number of innocent people arrested and charged (wrongly) by the polce I certaiinly woulsnt hold them out as "experts" on suspicion.

 

Donald2000's picture

Suspicion

Donald2000 | | Permalink

In reply to what my esteemed colleague just wrote, I very much doubt if you have more legal knowledge than any police officer and even if you have you wont be versed in their techniques of investigation.

But if you think you are, then I wish you good luck in weeding out the offenders and doing the government's bidding on this matter. Because lots of luck is exactly what you are going to need.

 

 

 

 

Old Greying Accountant's picture

OK, this is bordering on the farcical now...

Old Greying Acc... | | Permalink

... if I have added it all up correctly, if I suspect a client has been fiddling his tax, I cannot accept payment of my fees from either my client or HMRC because I would then be handling the proceeds of crime and be commiting a ML offence myself?

I also can't tell my client why he can't pay me because that might be tipping off, but equally, by refusing his cheque I may be tipping off.

But if he asks where his refund is I can't say I have sent it back because that might be tipping off and I can't give it to him because that would be handling the proceeds of crime, and probably aiding and abetting in ML offences, but if I don't tell him I have sent it back or give it to him that could be tipping off, or else he thinks I have stiolen his money so he burns my house down.

Now, talking of money laundering offences, how much did Brown leave in my pension...

 

 

cymraeg_draig's picture

Donald2000

cymraeg_draig | | Permalink

 

After 40 years of running my own accountancy practice, and over 30 years also running a legal practice specialising in criminal defence I have absolutely no doubt that I have more legal knowledge than virtually any police officer.  It may surprise you to know that the average police officer has very little knowledge of the law (other than PACE) and in fact is not required to have any in depth legal knowledge.  That is why in anything other than the most obvious case, cases must be referred to the CPS for a decision to be made on whether to charge, and exactly what offence to charge with.  (Not that the CPS are the sharpest knives in the drawer either).

Investigative techniques are something that any criminal barrister has to be well versed in - without that understanding how are we to examine the varacity of any "evidence" obtained by the police?

"Weeding out" offenders is something that we do every day as is carrying out our own investigations, because only a fool (or a reckless barrister) would accept a prosecution case at face value without checking and testing every aspect of it and independantly investigating the claims and allegations made in it.

As for "doing the governments bidding" - that is something I never do. I always act according to my own etyhics, which the government may or may not agree with.  I believe in "justice" - not "law" - they are often two very different things. 

As for politicians of all shades, I rate them as being just about on a par with pond life and have zero respect for their constant ability to respond to situations with ill considered knee jerk legislation, such as the money laundering regulations, which actually bring the law into disrepute and make a mockery of the concept of justice. 

 

 

 

 

Donald2000's picture

cymraig_draig

Donald2000 | | Permalink

Thanks for your reply.You sound like a most interesting person. I have a certain amount of knowledge of the criminal system, having worked with the police. You have illustrated that you have a lot more. Very nice talking to yourself.

 

Regards, Donald.

cymraeg_draig's picture

OGA's pension

cymraeg_draig | | Permalink

Now, talking of money laundering offences, how much did Brown leave in my pension...

 

 

 

Posted by Old Greying Acc... on Tue, 12/04/2011 - 22:46

 

To answer your question - not a lot - when it came to pensions McBrown subscribed to the Maxwell school of economics.

 

 

davidwinch's picture

OGA

davidwinch | | Permalink

OGA

I think you are going over the top here!

If you suspect a client of criminal conduct there is still no problem in your accepting payment of a (sensible) fee for work you have done for him.  You would not be committing a money laundering offence because of the "adequate consideration" defence of s329(2)(c) PoCA 2002.

You can certainly talk to your client about your worries about his misconduct.  What you should NOT do is tell him that you have reported the matter to your MLRO or to SOCA (telling him about your report could be tipping-off).

If you suspect he has engaged in criminal tax evasion to generate a refund sent to you (which is NOT in payment of your fees) then that refund may be 'criminal property' and you need consent from SOCA to deal with it (either by returning it to HMRC or passing it over to the client).  That consent may take a few days to materialise.

If he burns your house down don't worry - that isn't reportable to SOCA as it does not generate any benefit for the offender.

No worries, eh?

David

cymraeg_draig's picture

Donald.

cymraeg_draig | | Permalink

I have a certain amount of knowledge of the criminal system, having worked with the police. yourself.

Posted by Donald2000 on Tue, 12/04/2011 - 23:01

 

 

Sounds like we come from opposite sides of the fence as I've spent years destroying police cases :)

I'm afraid over the years my respect for the police has diminished (pretty much as my respect for HMRC has).  It's difficult to respect an organisation which, in recent years (the last 15-20), seems to have recruited more and more officers prepared to perjure themselves.

To give a couple of examples,

  • I recently encountered an officer who swore he saw the accused driving along a road in car registration ******* on 1st May of the year in question. He also stated he was trained in surveillance techniques, and produced a detailed log covering the day in question. All very convincing. EXCEPT it was a new car and the registration documents for the vehicle clearly proved that it was first registered in the UK on 1st July that year.  The officer had some difficulty in explaining how he could have seen a car 2 months before it existed.
  • Another (female) officer claimed to have been at a particular location having just left her sick fathers house. Under cross examination she gave details of his health, the breakfast she had given him that morning when visiting him, etc.  Because we had thorughly investigated every aspect of her claims we were then able to produce the death certificate showing that on the day in question her father had been dead for 2 years and had been cremated. I'm not sure how an urn of ashes eats bacon and toast - but had to agree her father was certainly "ill".

Of course in both of the above cases the entire evidence of the officers was totally undermined at that point.

With numerous examples like the above it is impossible to retain much respect for an organisation employing them.

 

 

 

 

ShirleyM's picture

If you can't beat 'em ......

ShirleyM | | Permalink

I am not defending the police, or anyone else, who commits perjury, but I am sure they get truly fed up with offenders who wouldn't admit the truth if it hit them in the face!

Yes, I know they are in a position of trust so the offfence is far more serious ... but when you have politicians setting such a good example it doesn't take much explanation!

Donald2000's picture

Cymraeg

Donald2000 | | Permalink

Luckily, I was not actually a police officer, so I dont feel that discredited. I was however an appropriate adult who worked with solicitors and got to hear plenty of cases. I think your examples of what the police have done to stitch up evidence is pretty damning of them. I agree with yourself, it is hard to have respect.

I last worked with HMRC in 1987 before I went off to get an Accounting Degree and an Open University Diploma in English Law. I felt that HMRC were going downhill even then and that was in the glory days when we actually worked all our own allocations and were not reduced to the level of call centres. I think most of us who worked for HMRC in those days are just simply aghast at what goes on now.

Like yourself, I simply dont know what to make of what passes for present day standards. Regards,

 

cymraeg_draig's picture

Memories

cymraeg_draig | | Permalink

I think most of us who worked for HMRC in those days are just simply aghast at what goes on now.

 

 

Posted by Donald2000 on Wed, 13/04/2011 - 08:52

 

Ah, the good old days, when you could wander into the local tax office, drag the inspector over the desk and slap some sense into him, then go home and have a fish supper - and still have change out of a farthing :)

 

 

adequate consideration ?

The Black Knight | | Permalink

Best double the fee to make sure then ! lol

still if you get caught, look on it as an opportunity to retrain as a criminal.

the hours are better with excessive remuneration, and your poor accountant will take the rap.

as they say " the wages of sin are death but the hours are good"

Use of client account

mike marcus | | Permalink

-- Mike Marcus Core Resolutions LLP

I cannot altogether believe what I am reading. If the money is being paid into client account to settle an investigation, that money is no longer from the proceeds of crime unless the accountant has reasonable grounds for suspecting that there are further undeclared tax liabilities.

Once the investigation is over the proceeds of crime have been regularised and hence the settlement of them is no longer out of the proceeds of crime.

Obviously, I would rather the client made the cheque payable directly to HMRC

 

 

davidwinch's picture

An interesting view

davidwinch | | Permalink

Mike

You say, "Once the investigation is over the proceeds of crime have been regularised".  That is a very interesting view.

The money laundering sections of PoCA 2002, particularly s340, contain no reference to the proceeds of crime being "regularised", as you put it, in any circumstances.  That may be regarded as a deficiency in the legislation.

Certainly it was envisaged that, for example, cash seized by the police was not thereby "regularised" and continued to be 'criminal property'.  Therefore police officers were at risk of themselves committing a money laundering offence by their possession of it.  For that reason there is a specific statutory exclusion contained in s329(2)(d) which removes the risk of them being prosecuted for performing their police duties.

I do not think however that statutory exclusion extends to an accountant forwarding settlement proceeds to HMRC.

On the face of it in my view the monies in question do meet the definition of 'criminal property' in s340 and, in particular, the monies do "constitute a person’s benefit from criminal conduct or . . . represent such a benefit (in whole or part and whether directly or indirectly)".

Indeed it seems to me that, insofar as the payment is made in respect of tax which has been evaded, the whole point of paying it to HMRC is that it does represent the benefit of that tax evasion.

David

billgilcom's picture

Satisfaction-

billgilcom | | Permalink

Ah Yes C_D, gone ar the days when you could get up in the morning knowing that at some point in your day you would get dragged over your desk and get slapped about a bit by a wax coated accountant who still had the smell of fish on his fingers from the previous night.

Those were the days

An interesting reaction

mike marcus | | Permalink

-- Mike Marcus Core Resolutions LLP

A negotiated settlement with HMRC is a civil matter and hence HMRC have accepted it is not a criminal matter and never was. Therefore once the settlement is made there are no proceeds of crime and the agreed amount can be sent to HMRC

davidwinch's picture

A different point

davidwinch | | Permalink

Mike

I think you are now making a different point (either that or I failed to grasp the point you were making earlier).

If HMRC accept a settlement, including a civil penalty, that means that they do not propose to mount a criminal prosecution.  That is rather a different matter from saying that no crime was committed.

The taxpayer may well have committed a criminal offence (if he has dishonestly under-declared his income, for example) without that resulting in a prosecution by HMRC when they get to know of it.

However the decision by HMRC not to prosecute the offence does not, in my view, alter the status of the benefit of any tax evasion as 'criminal property' for the purposes of the money laundering provisions in Part 7 of PoCA 2002.

David

yes but

The Black Knight | | Permalink

in a civil investigation the penalties are based on taxpayer behaviour,

mistake - clearly not a reportable offence

careless error - ??

deliberate - probably

deliberate and concealed - almost definately criminal

are we supposed to make this assesment before the revenue do ? not so easy if the case could fall into either category, as most would.

I have one at the moment still under negotiation , HMRC have used the words "careless or deliberate"

I would say it was the clients and previous advisers misunderstanding of the rules. - mistake ?

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A group for discussing issues relating to suspected money laundering and other crime