When suspicious activity become suspicious

An old client coming back to us has said something which worries me

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We had a client 3 years ago who did no work with us, appeared to have not traded at all, provided us with no information and then disapeared.  His company was eventually struck off.  He has just called back and asked us to open a new company but said on the phone 'I had better not use the same company name, I might end up having to pay Corporation Tax'.  This could be simply a case of him mis-understanding, but could equally have been him closing companies without completing any returns....tax evasion and hence falls under the Money Laundering Regulations?

My initial response was going to be to advise him strongly that if any tax was outstanding from his previous company that we address this now (with payment up front) and if he declines to do so/evades the issue then decline to act for him.  I am just not sure if this is a robust enough response or if it is 'Suspicious Activity Report' time....

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By andy.partridge
24th Apr 2018 17:49

"We had a client 3 years ago who did no work with us, appeared to have not traded at all, provided us with no information and then disapeared. His company was eventually struck off."

Why are you bothering with this person? Are you 'that' desperate and does the ex-client think you are 'that' soft? That's what really bothers me about this.

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By legerman
24th Apr 2018 18:24

If the Company has been struck off there are no taxes due, the shareholder/director has got away with it. He couldn't use a new company with the same name anyway, he would have to resurrect the old one.

I wouldn't want to act for him though, if he didn't engage last time, what makes you think he will this time.

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Replying to legerman:
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By Tosie
25th Apr 2018 10:21

He could use the same name of old company for new one which is part of the madness of our system. Form a company run for a year don't pay any taxes and then let Companies House strike off and hey presto start again with same name three months later.

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Red Leader
By Red Leader
25th Apr 2018 12:23

Perhaps the old company did trade and make a profit, he just didn't tell you.

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By KungFuKipper
26th Apr 2018 14:20

Sorry fellas, been away from the office for a couple of days. I wouldn't go near him personally but he is a personal friend of an introducer of clients so my hands are kind of tied.

I am also not completely convinced he didn't trade. We have a new to us clients going through a VAT fraud investigation at the moment about previous company activities and don't want to be part of that process. Based on my opinion and your answers the question sort of comes down to
1) if he did trade, never completed any returns and closed the company is that tax evasion and therefore reportable as an SAR?
2) if we don't know he traded and have no reason to suspect he sis - is it still time to dust off the SAR?

Cheers

KFK

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Replying to KungFuKipper:
By Duggimon
27th Apr 2018 10:58

I think the crux of the matter is whether you consider what he said to you to be enough reason to suspect suspicious activity on his part.

Personally, when he came back after the three year absence I would have quizzed him on what happened with the first company. If he told me that he never traded and I believed him I'd have no reason for the SAR, if he told me he wound it up to dodge tax, well, I'd probably not re-engage and I doubt his personal friend would take issue with the decision.

Did you not ask him anything about it? Even after the comment re: Corporation Tax?

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By pauljohnston
27th Apr 2018 14:57

If in doubt issue a SAR. You have no idea what he has been up to and comments like "I had better not use the same company name" are never made without their being a reson.

If the previous company had not traded there would have been to CT.

I would also not act for him again.

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