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HMRC deploys three powers to stamp out VAT fraud

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HMRC used three different powers to sanction an individual for alleged VAT and excise duty fraud committed by overseas companies that they were involved with.

26th May 2020
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The first tier tribunal case of Parul Malde (TC7621) was a pretty routine win for HMRC. It concerned input tax on legal fees, and whether those costs were a personal expense of Malde or a business expense of his VAT registered property business. The court agreed with HMRC that the costs were private.

The interesting issue is the powers used by HMRC to deal with the taxpayer’s supposed dishonest behaviour in relation to his alleged role as a shadow director of two overseas companies:  Sintra Global Inc and Sintra SA.

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By Paul Morton
27th May 2020 10:59

Good morning

I read the above article with interest and in particular the paragraph relating to the PLN. You state: "To impose a PLN it is necessary for HMRC to prove that the individual in question either personally gained or sought to gain financially from the evasion (see HMRC Compliance Handbook CH98550)".

Whilst this is indeed what is shown in the HMRC manual it is for guidance only and is not what the legislation sates. This is at Paragraph 19 of Schedule 24 FA07 and makes no mention of this test whatsoever. The Tribunal will only go by the legislation and therefore this test is not required and the HMRC guidance is not grounds for appeal.

I'm speaking first hand about this having just retired from HMRC after 43 years and being involved in investigation work for more than 33 years.

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