Defending Fraud Prosecutions
Daniel Godden, BSQ partner and white collar crime specialist spells out your options and comments on the changing landscape of HMRC and fraud prosecutions.
“The most common problems arise when your local tax office has a query about a tax or VAT return. Usually your accountant will be your first port of call. But when it gets complicated I’m asked to step in” explains Daniel.
Complications can arise when the tax authorities are threatening a criminal prosecution rather than seeking a civil settlement. Civil settlements can take the form of a COP 9 agreement in tandem with a contractual disclosure facility (CDF) where the HMRC agrees not to start criminal proceedings for an alleged fraud if in return the taxpayer makes full disclosure. HMRC can re-open tax assessments going back 20 years and can ask for the tax due, interest and impose additional financial penalties. Any material errors or false statements when co-operating could result in prosecution.
“HMRC have their own guidelines as to when a COP9/CDF is appropriate. What we’ve noticed recently is that the authorities are less willing than before to use this procedure particularly if they are investigating tax avoidance schemes.”
If HMRC are thinking of a prosecution, one of the first thing they will do is ask the person concerned to attend an interview under caution. White collar crime specialists like Daniel have extensive experience of representing individuals at interviews under caution, which are conducted according to the procedure set out in the Police and Criminal Evidence Act 1984.
“I’ve conducted many, maybe hundreds of these types of interviews” says Daniel. “They provide an opportunity for us to assess the strengths and weaknesses of a case and decide if there is any possibility of persuading the authorities to discontinue an investigation. In the past we have managed to achieve this by pointing out the flaws and weaknesses in the evidence.”
Notable pre-charge interventions include the case of S who was wanted by the HMRC for his involvement in a film financing tax arrangement. Following Daniel's intervention, the authorities abandoned their efforts to extradite him to the UK.
These types of tax avoidance schemes are one of Daniel's specialist areas although he has represented clients across the whole spectrum of tax and fraud enquiries including VAT and excise fraud allegations. Based on recent experience Daniel thinks more HMRC prosecutions and investigations are likely.
Daniel also says it is important to keep in mind that in 2013 the Director of Public Prosecutions announced that the authorities would be targeting 'sophisticated investors' rather than simply the promoters or designers of tax avoidance schemes. “I’m currently representing an individual in the first test case where an investor alone has been targeted for this reason.”
Daniel can’t say more about the case which industry experts are following closely but he remains upbeat about the outcome.
Daniel's CV refers to his entry in the Legal 500 as a ‘fantastic lawyer’ who is ‘first rate’ with ‘encyclopaedic knowledge’. Past clients have also been glowing in their praise for him.