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Definition of ‘tax adviser’ for Money Laundering

24th Mar 2018
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One company appealed against a fine for failing to fulfil Money Laundering regulations. One argument was that it was not a tax adviser. The company, Online Tax Rebates Ltd, prepared tax rebates for persons using PAYE. This included rebates for purchase of uniforms and tools, and for other specific costs. Their website described that as:

“We are the UK’s leading experts in this type of claim and we’ve already obtained refunds for more than 100,000 UK taxpayers.”

The case turned on the relevant definition in the Money Laundering Regulations 2007.

Regulation3(1)(c) provides that relevant persons include “auditors, insolvency practitioners, external accountants and tax advisers”.

Regulation3(8) reads:

“‘Tax adviser’ means a firm or sole practitioner who by way of business provides advice about the tax affairs of other persons, when providing such services.”

HMRC’s position was that the Company was a tax adviser, and so a relevant person for the purposes of the Regulations(paras 47, 48).

The FTT concluded that the company was a tax adviser, and therefore subject to the Regulations. This seems obvious, but the logic is worth reading (paras 56-79). Although the company was ‘hands-off’ in that it had little direct contact with its clients, and no face-to-face meetings, it WAS providing tax advice that enabled its clients to secure tax refunds.

Just to raise the stakes, the company made a serious complaint. Counsel for the taxpayer “submitted that in conducting this money laundering enquiry and imposing a penalty, HMRC was acting maliciously and so with an improper purpose. Its true purpose was to prevent the Company from facilitating the legitimate claims of many thousands of low-paid employees. “

That argument was properly rejected!
http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=10345

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