Report a client for tax evasion?

Responsibility of reporting a client for clear tax evasion and how should it be reported.

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A client has two limited companies. He issued an inflated invoice for services from one to the other, to reduce the profits on the larger company. He then failed to declare the invoice on the smaller company. When pointed out to him, he asked us to 'lose' this rather large sum of money, which we explained isn't possible. Time has passed and we are almost certain that the income has never been declared, in addition to other suspicious activity.

Fortunately, we've never had any clients behave this way before, but for that reason we want to clarify a few things before taking any further steps.

- We feel obligated to report this. Are we correct to do so or is it complicated by any form of client confidentiality?
- Where do we report this? An SAR to the NCA or just a tax evasion report to HMRC?

Any help would be greatly appreciated.

Replies (11)

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By The Innkeeper
08th Jan 2019 10:55

sar to nca but have a good book to read the website to make the report is cumbersome and slow

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By Accountant A
08th Jan 2019 11:13

Speak to your professional body if you are unsure.

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By lesley.barnes
08th Jan 2019 12:03

It's a SAR to the NCA. I assume you no longer act for him because you say time has passed and you are almost sure he hasn't reported the income. I'm guessing that you would know if you still acted. If you do still act for him I would disengage as well.

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David Winch
By David Winch
08th Jan 2019 12:59

Agree - an SAR to the NCA. You must NOT report this to HMRC (without the client's consent) because that would be a breach of client confidentiality.

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Jennifer Adams
By Jennifer Adams
08th Jan 2019 16:54

I wrote and loaded an article on Accweb on this very subject only a week ago
It explains what to do and also whether you should bother.
You might to take a look:
'Should you bother to submit a SARS'

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Replying to Jennifer Adams:
By Wanderer
08th Jan 2019 17:00

Page not found.

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Replying to Jennifer Adams:
By aman007
11th Jan 2019 11:16

page no found

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By David Gordon FCCA
09th Jan 2019 11:58

So did you file accounts of the receiving company?
How may you finish the account of the paying company without first agreeing the inter-company balance?
If not, I hope not, any way tell him to find another accountant.
Reality might then strike.
Meantime fines or penalties from Co Hse and HMRC will roll in.

If you, Heaven forbid, filed accounts, speak to your PI insurer.

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Jennifer Adams
By Jennifer Adams
10th Jan 2019 16:39

Thanks for the redirection sqwint!

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By frankfx
11th Jan 2019 02:00

Are there any Vat implications.
The none payment and non receipt of the vat on the invoices will mean a Vat adjustment after 6 months.
Two sets of return's

The movement of the sale or purchase item from the trading ledgers to loan accounts implies constructive payment and so on

Other points

False accounting

Fraud Act

All come into focus.

Destroying paper
or digital trails or instructing another to do so are serious matters

Ascertain the amounts
Check the notes that
You maintained are retained

I know a bookkeeper who was carpetted up with all the others... entirely innocent but labeled by association.
Trauma and a case overhanging was an emotional drain.


So chat with P I
And professional body should be considered

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