As part of a move to target specific sectors in parts of the country they consider to be high risk, at the end of last year HMRC established a task force specifically to look at irregularities with the tax affairs of solicitors and barristers in the London area. Several months on, HMRC is enjoying notable success with this new approach.
Specialist investigators will review the files of selected London-based lawyers and match the information in those files with HMRC intelligence data, before making written challenges in cases where there are discrepancies. Two barristers have already been in court on tax offence charges and both have now received significant custodial sentences. The first received a three-and-a-half year sentence for a tax fraud involving additional tax of £600,000 covering a 12 year period. The second barrister received an 18 month sentence for an £80,000 tax fraud covering a seven year period. Both were significant victories for HMRC, which should send out the message that nobody is above the law.
HMRC has 'promised' the Treasury that it will increase the number of criminal prosecutions, so it is likely that the more serious cases will be pursued by criminal investigators which will inevitably involve searches being carried out under PACE legislation. HMRC is keen to pursue criminal investigations in cases involving high profile taxpayers or professionals. A London-based lawyer would certainly fit the bill and provide HMRC with the publicity it seeks. However, there is another avenue for HMRC to publicise details of tax evaders which tends to be forgotten. This is the legislation at section 94 Finance Act 2009, commonly referred to as the 'naming and shaming' legislation. This entitles HMRC to publicise details of deliberate defaulters and the offences which they have committed, as well as the amounts evaded, where certain criteria are met. Clearly HMRC would be keen to use this publicity in a civil case involving a lawyer.
So what are the options for a lawyer wishing to make a disclosure?
The reality is that people who have committed tax fraud can have the threat of criminal investigation substantially negated if they make the appropriate voluntary disclosures. There are currently various opportunities available. A voluntary disclosure will make a significant difference when any penalty is considered and giving full co-operation will ensure that one is not 'named and shamed'. In addition, there is the possibility of making the disclosure using the Liechtenstein Disclosure Facility (LDF), which provides a guarantee of no criminal prosecution and a reduced penalty.
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