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Money laundering questions

Money laundering questions

New client comes to see us and reveals a source of income which he has never told his existing accountant before and never reported to HMRC. This goes back at least 20 years.

We advise him to make full disclosure to HMRC which he agrees to do. This is now in progress. Do we need to report, given that he is 'owing up' anyway?

Also a similar scenario but the client decides not to appoint us so we don't know whether any disclosure was made. This one is surely reportable?


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28th May 2012 14:21

Over to you ....

.... David W!

My own view, without any knowledge of the client or the type of income omitted or why, is that a report is required on both counts. Given the potential penalties for failure to report, I'd rather be safe than sorry.

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28th May 2012 14:30


David is in great demand these days  :)

Just to help him out .....

New client - no need to report if the client is going to come clean and disclose everything.

With regard to the potential client, you have no knowledge of whether the client is going to come clean or not, so I personally would not report.

However, if the potential client informed you that he will not come clean, then a report may be advisable.

Hopefully, David will be along to give you the correct actions to take.

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28th May 2012 14:52

My votes

First case:

Why did he not disclose to previous accountant, I wonder?  Does he recognise that he should have done and did he keep it secret at that time to evade tax?

However, if the OP is a member of a professional body which satisfies the criteria of s330(14) PoCA 2002 then I suggest this falls within the 'privileged information' exception of s330(6)(b) - so no report should be made.

This is because the information came to you in the context of you being asked to advise on the taxpayer's LEGAL position (in relation to his past failure to disclose), it was not a case where the client simply asked you to prepare a tax return in order to comply with his (known) legal obligations.  See s330(10).

Second case:

If the situation is the same (i.e. taxpayer has revealed to you a past irregularity and asked for your advice on how to deal with it) then the answer is the same.  The information is privileged and should not be reported.

Whether the taxpayer accepts your advice and actually does report, or does not, is irrelevant provided that he has not sought your advice in order to further a criminal course of conduct (e.g. he has not asked you, 'Where can I hide my money so HMRC will not get to know of it?').

So my vote goes for no report in either case.  (But I would make file notes as to what I knew / suspected and why I had decided not to report.)


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28th May 2012 14:52

Which is why, David ....

.... your opinion on MLR and other legal matters is much sought-after, and mine is not ;)

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28th May 2012 15:21

Me, too

David will be blushing with pride (or embarrassment!)... but he has a knack for explaining things in a clear concise way that even I can understand :)

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