money laudering and trades professions

money laudering and trades professions

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I have lots of small clients mainly made up of the trades profession. Many of them struggle in keeping any records at all! No amount of legislation is going to help an indvidual who is awful with numbers and administration. Monines earned via CIS we can account for.
The plastic bag arrives and I carry out "incomplete accounting".

In the past I have agreed a cash element per month to be included in their tax return. Some of them do keep a record of cash transactions. I don't believe they are evading tax as such.

What is the situation here with tax evasion and money laudering? There is possibly an element?

Does anyone have any comments.

many thanks for all responses.


ma gallagher

Replies (6)

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By Neville Ford
23rd Mar 2004 10:18

Suspicion or prejudice ?
Under the MLR, as I understand it, you have to have suspicions that your client is receiving the benefits of criminal activity. In order to have suspicions, you have to have some form of evidence, otherwise it is mere conjecture. We are not required to report conjecture.

Just because your client is disorganised and works in the building trade is not evidence leading to suspicion. Provided any income shown in the bank statement is either treated as income or adequately explained then there is no problem. If your client tells you he has received monies not entered into the bank (or even if there is no bank account) but they are then accounted for, no problem. If you ask your client if there is any income not included in the accounts and he says "No" and there is no other evidence indicating there may be, then no problem.

On the expense side if your client claims an expense it should be supported by a receipt. If not you should look for other support. If there isn't any then it is more problematic. If the client insists, include it provided it is reasonable and consistent with the business and point out they will have to substantiate it in the event of an enquiry. As far as I am aware poor record keeping, whilst lamentable, is not a crime.

Unbalanced control accounts are not prima facae evidence of criminal activity, merely poor record keeping. They should be resolved with the client, and only become an issue if it suggests to the reasonable man that there is something fishy occurring.

We are not policemen we do not have to go investigating our clients and provided our conclusions are consistent with the facts there is no problem. Whilst I feel these regulations are dangerous for other reasons, which I have cited elsewhere, we shouldn't be frightened or bullied into acting as tax inspectors. I feel that David Winch is suggesting we give into this bullying and effectively report any incomplete records. Just because the records were incomplete is not evidence of criminal activity in itself you need other evidence, it's just as likely that the tradeperson has paid too much tax.

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By User deleted
16th Mar 2004 18:13

Civil or criminal - does it matter under the POCA?

You, like others, have sought to distinguish between civil offences and criminal offences on grounds that the former carry penalties whereas the latter are punishable by fines.

Section 242 of the Companies Act, whereunder every director of a company late filing its accounts “is guilty of an offence and liable to a fine” and Section 93 Taxes Management Act 1970 whereunder any person failing to file a return “shall be liable to a penalty which shall be £100”, afford examples of the supposedly different situations.

In either case - penalty or fine - an offence must have been committed.

Considering that section 340(2) of the POCA deems “an offence” to constitute Criminal Conduct for the purposes of the POCA, how can you be so certain that any so called civil offence, giving rise to property or pecuniary advantage, is not reportable under the POCA?


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By User deleted
17th Mar 2004 13:59

Are all offences crimes?

My question was not directly related to the question posed by MA Gallagher (so I apologise to him/her for the hi-jacking) - it was prompted by your answer, which draws a comparison between a civil penalty and a criminal offence. I am not questioning your judgement; I am genuinely interested in knowing where we draw the line, if there is a line for the purposes of the POCA. Is every offence criminal, or are some offences not so?

I am not a lawyer; I am an accountant. In many situations (usually involving the more serious matters) it is clear to me that an offence is criminal. In others(usually relatively minor matters, which have now become a concern) I would not readily know whether the conduct involved a crime, a civil failing, a fine, a penalty, or whatever. I imagine estate agents, car dealers, casino operators, IFA’s etc will have even less of an idea than I have. I am sure it will seem surprising, to those without detailed knowledge, that we are expected to report when a Companies House Annual Return is late, but maybe not so when a tax return is late. I think there are many who think a crime is more serious than an offence. I think few will understand why a penalty can be incurred if there has been no offence.

You ask what makes me think a person who renders himself liable to a penalty has committed an offence. One example is Section 72 VAT Act 1974. It provides for a PENALTY. It does not refer to a fine. The difference (known to me) is that this Section relates to the fraudulent evasion of VAT. The POCA itself, at Section 334, refers to penalties, not fines, although again, in this context it is clear to me that it refers to criminality. In essence there is often no difference between a fine and a penalty.

I do not know for certain but I suspect that, more often than not, legislation does not make it clear to the non-legal mind whether fines and penalties relate to civil failings or criminal conduct.

Apart from our own knowledge and understanding of the law we must consider, under Section 340(3) POCA, if the alleged offender himself knows or suspects that he has some benefit and that it arose from an offence. If we conclude he does not, we are not obliged to report. If we report without having reasonable grounds, we breach client confidentiality.

Are you convinced that the “offence”, to which Section 340(2)(a) POCA refers, excludes civil failings that attract penalties? Is there a legal definition of "offence"?

PS Have you noticed that the NCIS LIVR form does not require the reporting of the subject's address, or am I missing something?

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By SeanPease12
23rd Jun 2017 14:50

If a Chartered accountant is asked by an employee of a clients firm (one director out of 4) to fabricate minutes, votes and a resolution to facilitate the payment of illegal dividends 8 months after they had been illegally taken (i say illegally) as A) the company didn't approve the dividends B) the company had no money to pay a dividend, C) the company was insolvent due to failing to pay a creditor, D) The money belonged to the company not to the individual director leading to the insolvency of the company due to the removal of the company's money (the accountants clients) is this an offence by the accountants under ML / POCA ?

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Replying to SeanPease12:
By Ruddles
23rd Jun 2017 15:06

For starters, start your own thread and don't open up one that is 13 years old.

Secondly, you only say that the accountant was asked to assist - did he actually do so? Always wary about offering any opinion when we don't know all of the facts.

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Tom Herbert
By Tom Herbert
23rd Jun 2017 15:18

This thread will be closed for further comments, but do feel free to start a new thread by hovering over the Any Answers tab and clicking 'ask a new question'.

All the best,


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