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Monthly Archives: August 2020

TaxWatch calls on City of London Police to investigate fraudulent tax schemes

19th August 2020 by Alex Dunnagan

TaxWatch is calling on the Economic Crime Unit of the City of London Police to open a fraud investigation into the promoters and marketers of disguised remuneration tax avoidance schemes.

Recent press reports have revealed that disguised remuneration tax avoidance schemes continue to be marketed to the public, including the direct targeting of NHS workers during Covid-19 pandemic. These schemes are marketed as “lawful” means of reducing a tax liability despite very clear legal rulings to the contrary.

The fraudulent marketing of schemes leads to contractors handing over substantial fees to dishonest tax advisors on the false belief that what they are doing is lawful.

However, when the schemes inevitably fail, users will be left with crushing financial losses.

Writing to the Economic Crime Unit, Director of TaxWatch George Turner said:

“Now that the legal position on the taxation of disguised remuneration schemes is crystal clear, anyone continuing to design, market, and promote loan schemes can not be doing so in the honest belief that these are anything other than unlawful attempts to evade tax.”

“Promoters continue to perpetrate these schemes because they are able to generate very significant fee income from scheme users, and if HMRC challenge these schemes, the users, and not the promoters, will be held liable for the taxes owed.”

“These schemes are an economic crime which cost the Treasury hundreds of millions a year. Until the promoters of fraudulent tax schemes are prosecuted, they will continue to ruin lives.”

The full text of the letter can be found here.

This was reported on in Law360, Computer Weekly, and Contractor UK.

Photo by Bruno Martins on Unsplash

Rogue Landlords

5th August 2020 by Alex Dunnagan

Up to £1.73 billion a year in tax is being dodged by unscrupulous landlords. The new figures are revealed in a report by TaxWatch, and suggests that levels of non-compliance have exploded since 2010, the last time that HMRC published official figures on the scale of evasion in the buy-to-let sector.

In that year, HMRC estimated the amount of tax lost to residential landlords not declaring their income was £540 million.

The report recommends that the government introduce a national register of rental properties to improve tax compliance in the buy-to-let sector.

Read the full report here.

This research was featured in Vice, the Mail on Sunday, Law360, and Tax Notes International among others.

Photo by Ethan Wilkinson on Unsplash

General Electric tax fraud allegations revealed

4th August 2020 by Alex Dunnagan
A new report published by TaxWatch today reveals the serious allegations of fraud being levelled against a major US corporation by HMRC.

The full report, titled “Around the world with $5bn: General Electric and the Australian arbitrage” details how General Electric moved $5bn between the US, Luxembourg, the UK and Australia in just four days as part of a complex “hybrid arbitrage” tax avoidance scheme, that allegedly generated a tax benefit for GE in the UK of up to £760m over a period of 10 years. The report is based on a series of court documents that have emerged as part of the dispute between the company and the tax authority.

According to HMRC’s claim, GE were only able to gain the tax benefit after they knowingly withheld information from the tax authority in an attempt to defraud the British taxpayer.

This included deleting key passages from the minutes of a board meeting in order to hide the true extent of the tax avoidance scheme.

GE strongly denies the allegations, and says that the entire scheme was presented to HMRC in discussions with the tax authority at the time.

HMRC’s allegations of fraud were made as part of a recent amendment to ongoing litigation between the tax authority and GE. GE sought to challenge HMRC’s right to amend their case to include allegations of fraud.

A recent High Court Judgment by Mr Justice Zacaroli confirmed that two of HMRC’s allegations of fraudulent misrepresentation had no chance of being proved, in part because of the time that had passed since the acts took place. A third allegation, fraudulent misrepresentation on the basis of knowingly failing to disclose relevant documentation, was allowed to proceed to a full trial. The case is scheduled to be heard in court in 2021.

The full report can be found here.

This research was featured in the Financial Times, Accountancy Daily, and the Australian Financial Review among others.


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