House of Lords Report on Personal Service companies

House of Lords report on Personal Service Companies and their taxation
http://ow.ly/vztfQ

Jail for Newcastle health club crook who broke ban and conned investor (Insolvency Service)

Jail for Newcastle health club crook who broke ban and conned investor

14 May 2013 11:00

Michael Jeffels, a company director and a former semi-professional footballer, has been sentenced to 15 months immediate imprisonment after pleading guilty to running a company while banned and posing as a millionaire to convince an investor to part with tens of thousands of pounds.

Mr Jeffels pleaded guility and was sentenced at Newcastle Crown Court, following an initial investigation by The Insolvency Service and a full criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).

He was also convicted of perverting the course of justice for forging a document to make a claim for damages following a car accident.

Mr Jeffels had been banned from running a company for six years for his conduct while director of a previous company NECOE Ltd, which collapsed in 2002 owing £145,000 to creditors.

But the investigation showed that from 30 December 2007 to 16 September 2009 Mr Jeffels set up and ran a leisure club chain Ultimate Health and Fitness Ltd, (Ultimate Health), in clear breach of this disqualification.

Furthermore, Mr Jeffels posed as millionaire to dupe a businesswoman Elizabeth Chambers into investing substantial sums in the company.

Mr Jeffels even persuaded a former colleague and magistrate, Kamiljeet Kundi, to write a letter to Ms Chambers to vouch for his financial position. In fact, Mr Jeffels’ bank had stopped a number of payments from his account because of insufficient funds.

She agreed to a three-way partnership, with Mr Jeffels and his girlfriend Gillian Grainge, where each would invest £25,000 plus VAT, to expand his business from one club, Kicks Leisure – which he was legally running as a sole trader – by leasing two more clubs. Ms Chambers borrowed the money from a friend on a short term basis and handed it over to Mr Jeffels in June 2008. He then persuaded her to part with a further £10,000, saying it was needed urgently to pay stamp duty or they risked losing the clubs.

Mr Jeffels used the money to lease two clubs, in Wallsend, North Tyneside and in Oldham but neither he nor his girlfriend invested any significant funds of their own. More than £130,000 in membership fees from these clubs was then paid into Mr Jeffel’s bank account. It is unclear where this money has now gone.

Confiscation proceedings for proceeds of crime have been commenced by BIS against Mr Jeffels.

Mr Jeffels was also convicted of perverting the course of justice for forging a letter, purporting to be from Ms Chambers, which he used to try and claim damages following a car accident in 2008. The letter said he had been employed by Ultimate Health and Fitness Ltd as a consultant at the time of the accident and had suffered loss of earnings of £40,000.

Deputy Chief Investigation Officer Mike Williams from the Department for Business Innovation and Skills said:

”Mr Jeffels ignored the law and broke his ban to enrich himself. He is now in jail. His fate should be a warning to others tempted to ignore a disqualification order. Not only do you risk a prison sentence but we can also confiscate any ill-gotten gains acquired through acting in breach of a disqualification.”

Notes
1. Michael Jeffels, 29/04/1964, was sentenced by Mr Justice Eder at Newcastle Crown Court on 9 May 2013.

2. Section 13 of the Company Directors Disqualification Act 1986 makes it an offence to act as a director or be involved in the management of a limited company whilst disqualified. Mr Jeffels was disqualified from acting as a director for six years from 12 May 2006 until 11 May 2012. This disqualification arose from his conduct as a director of company NECOE Ltd, which went into liquidation on 27 November 2002 with a total deficiency of £145,655. On 1 November 2002, knowing that the company was insolvent, Mr Jeffels caused company funds of £123,455.93 to be paid to himself, ahead of other unsecured creditors. The funds came from the sale of the company’s premises on which VAT was charged. The VAT was paid to the defendant rather than to HM Customs and Excise, as it should have been.

3. Timeline of significant events in case.
6 MARCH 2012 First hearing at Newcastle Magistrates’ Court
5 NOVEMBER 2012 Mr Jeffels pleads guilty to one charge of acting as a director while disqualified and one count of perverting the course of justice
9 MAY 2013 Mr Jeffels was sentenced at Newcastle Crown Court

4. Offences:

Michael JEFFELS, between the 30th day of December 2007 and the 16th day of September 2009, being disqualified from so doing by virtue of an undertaking given to the Secretary of State, directly or indirectly was concerned or took part in the promotion, formation and management of a company, namely Ultimate Health and Fitness Ltd, without leave of the Court.

Michael JEFFELS, on days between the 31st day of August 2008 and the 22nd day of January 2010, with intent to pervert the course of public justice, did a series of acts which had a tendency to pervert the course of public justice in that he brought and prosecuted a claim for lost earnings against Malcolm Evans which was false.

5. Sentence:
Mr Jeffels was sentenced to 15 months’ imprisonment in total which was split as follows: two months for acting in the management of a limited company whilst disqualified, and 13 months for perverting the course of justice. He was disqualified from acting as a director or being involved in the management of a limited company for a further eight years.

6. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk.

7. BIS’ mission is to build a Dynamic and Competitive UK economy, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. We investigate and prosecute a range of offences, primarily relating to personal or company insolvencies. Further information about the work of the Criminal Investigations and Prosecutions team is available at https://www.gov.uk/fraud-bis-investigations-prosecutions-and-enforcement

Need help in avoiding situations like these?

The UK authorities, notably HMRC and the Insolvency Service,  have been having a field day in recent weeks with the number of successful prosecutions and disqualifications that they have reported.

How many of the individuals and companies might have escaped the trauma had they involved professional help at an early stage.

Many of the successes stem from the inability, or unwillingness, to keep a basic set of accounting records!!! In some cases it is out and out fraud which probably would have happened in any event if proper controls and checks and balances have not been set up.

Have a look at the blog for a selection of the best examples.

http://www.lease-a-finance-director.co.uk/blog.

If you need help to avoid such situations, then use the contact form on the website.

Tax barrister beaten in court (HMRC)

Tax barrister beaten in court

12 April 2013 09:36
A top tax barrister who designed his own tax avoidance scheme and defended it in court against HM Revenue and Customs (HMRC) has lost his attempt to avoid paying £190,000 in tax.
Rex Bretten QC designed a highly complex scheme which involved setting up trusts and investing £500,000 in discounted securities. He claimed his scheme created a loss of £475,000 which he could set against his income. The tribunal said that the securities had been issued solely to facilitate Mr Bretten’s tax avoidance scheme and that there was no genuine loss, so the tax is payable.

Although the structure was unique, the principles ruled on by the tribunal could be directly applied to a number of other cases involving further tax of around £2 million.

The Exchequer Secretary to the Treasury, David Gauke, said:

“The vast majority of individuals and businesses pay the tax they owe. There are, however, a small minority who will seek to exploit the rules and try to avoid their responsibilities by engaging in artificially contrived schemes.

“This is simply unacceptable and this case serves to highlight the work HMRC is doing to tackle evasion, avoidance and fraud. This Government has invested over £1 billion in HMRC and we are determined to ensure that the tax that is due under the law is collected.”

Jim Harra, HMRC’s Director General for Business Tax, said:

“This is another important success for HMRC at tribunal which may well have repercussions for other similar tax avoidance schemes.

“Some people make the mistake of thinking that a complex avoidance scheme backed by a senior lawyer is safe from HMRC’s challenge. That would be a big mistake, as this outcome proves. People should always ask themselves whether a proposed scheme is too good to be true.”

Notes
1. See http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=7112 for a summary of the tribunal decision.

2. The Finance Act 2003 abolished the “discounted securities” loss relief claimed by Bretten.

3. At the 2013 Budget, the Government published ‘Levelling the Tax Playing Field’, which sets out the progress that has been made in the drive against tax avoidance. See http://www.hmrc.gov.uk/budget2013/level-tax-playing-field.pdf

4. A significant crackdown on tax avoidance and evasion, which will in total raise over £4.6 billion in new revenue over the next five years, was announced at the 2013 Budget. See http://www.hmrc.gov.uk/budget2013/evade-avoid.htm

5. Since 2010, HMRC has won more than 50 tax avoidance court cases, protecting billions of pounds.

A landscape of lies – film tax fraudsters jailed for over 22 years (HMRC)

A landscape of lies – film tax fraudsters jailed for over 22 years

25 March 2013 14:57
A gang found guilty of making a film solely as a £2.8 million tax scam have been sentenced today in the first prosecution for film tax relief fraud.
HM Revenue and Customs (HMRC) investigators found that the film, A Landscape of Lives, which it was claimed starred Hollywood A-list actors, was never intended for the big screen and was a sham production. The real intent was to defraud the public purse of nearly £1.5 million in VAT along with nearly £1.3 million in film tax credit claims.
Gang leader Bashar Al-Issa, 35, of Maida Vale, London, along with Aoife Madden, of Northern Ireland, Tariq Hassan, of Essex, Ian Sherwood and Osama Al Baghdady, both of Manchester, owned Evolved Pictures. They told their auditors that they had a budget of more than £19 million, provided by a Jordanian company, to produce a blockbuster film in the UK.

Evolved Pictures told HMRC that millions of pounds of work had been spent on the film, including paying actors and film set managers, claiming this meant a VAT repayment was due of £1,488,187. However, during checks HMRC found that the work had not been done and most of the so-called suppliers and film studios had never heard of the gang. Furthermore, capitalising on a scheme designed to support genuine British film makers, Evolved made fraudulent tax credit claims of £256,385.50, while preparing to submit a further claim of £1,033,337.

After they were arrested, the gang came up with an elaborate plan to cover their tracks and hide the fraud by shooting a film on a shoestring, called A Landscape of Lies, featuring two television personalities.

John Pointing, Assistant Director of Criminal Investigation at HMRC, said:

“This gang thought they could exploit rules for genuine British filmmakers and thieve from the public purse for their own gain. They were wrong.

“Falsely claiming VAT that is not due is illegal – so we are pleased that instead of this film flop going straight to DVD, these small-screen z-listers are going straight to jail.”

The gang were found guilty on 12 March 2013. Confiscation proceedings are underway.

Notes
1. Bashar Al-Issa, DOB 13/03/1978, of Maida Vale, London, was convicted on 12 March 2013 of two counts of conspiracy to cheat the public revenue, and sentenced to 6 years 5 months at Southwark Crown Court.
2. Aoife Madden, DOB 01/08/1981, of Northern Ireland, pleaded guilty of two counts of conspiracy to cheat the public revenue and sentenced 5 years 5 months, reduced to 4 years 8 months, at Southwark Crown Court.
3. Tariq Hassan, DOB 18/09/1960, of Ilford, Essex, was convicted on 12 March 2013 of one count of conspiracy to cheat the public revenue, and sentenced 4 years at Southwark Crown Court.
4. Ian Sherwood, DOB 21/07/1959, of Sale, Manchester, was convicted on 12 March 2013 of one count of conspiracy cheating the public revenue and sentenced 3 years 6 months at Southwark Crown Court.
5. Osama Al Baghdady, DOB 01/02/1971, of Crumpsall, Manchester, was convicted on 12 March 2013 of one counts of conspiracy to cheat the public revenue and sentenced to 4 years at Southwark Crown Court.
6. Film tax relief is administered by HMRC and is available to legitimate film makers for British films that are intended to be shown commercially in cinemas and of whose total production costs at least 25 per cent relates to activities in the UK.

UK Budget 2013 (Deloitte)

1.1 Introduction

For detailed coverage and comment on the Budget visit Deloitte’s dedicated website at http://www.ukbudget.com Many of today’s Budget measures had already been set out in the Chancellor’s 2012 Autumn Statement and Finance Bill 2013. However, a welcome surprise was the announcement of a further cut in the headline rate of corporation tax to 20% by April 2015. This is currently at 24% and was previously set to reduce to 21% by April 2015. This additional cut will mean a unified rate of corporation tax of 20% from 2015 for all UK companies. A common feature of more recent Budgets and Autumn Statements is the introduction of anti-avoidance measures. Budget 2013 is no exception with a number of measures being announced, including further restrictions on the use of corporate losses.

1.2 Business Taxes

1.2.1 Corporation tax rates and deferred tax impact
Legislation will be introduced in Finance Bill 2013 to reduce the main rate of corporation tax for non- ring fence profits from 22% to 21% for the financial year commencing 1 April 2014 and from 21% to 20% for the financial year commencing 1 April 2015. This further rate reduction will have an effect on the accounting for deferred tax assets and liabilities for balance sheet dates falling on or after substantive enactment (or enactment for US GAAP purposes) of Finance Bill 2013. There will be an increase in the full rate of the bank levy to 0.142% from 1 January 2014. The reduced rate will be increased to 0.0712%.

1.2.2 Above the line: R&D expenditure credits
The Government confirmed the introduction of the R&D expenditure credits for large companies and increased the headline rate from 9.1% to 10%. Companies will have to elect into the new regime as it will operate alongside the existing super-deduction until the R&D expenditure credits become mandatory in April 2016. Companies with no corporation tax liability, such as those with tax losses, will now be able to access payable cash credits, subject to a PAYE / NIC cap. The details of the cap may still be revised and final details are expected to be included in the Finance Bill. For tax paying companies the R&D expenditure credit will be given as a discharge against the company’s corporation tax liability.
UK Budget 2013
If it counts, it’s covered
The R&D expenditure credit is designed to make R&D relief more visible to those making investment decisions so will be reflected in a company’s operating profit rather than in the tax entries.

1.2.3 Corporation tax loss relief: anti-avoidance
Various measures restricting the use of corporation tax losses are to be introduced effective from 20 March 2013. Draft legislation will be published for comment. – The proposed legislation will increase the threshold which must be exceeded before losses can be surrendered as group relief. The threshold will now include any apportionment of profit made to the surrendering company under the CFC rules. – Legislation will be amended to disallow trading losses where a change in ownership of a company has occurred and there is then a transfer of the trade within the new group. – Existing targeted anti-avoidance rules apply to restrict plant and machinery allowances where there has been a “qualifying change”, such as a change in ownership, in relation to a company. These rules have been expanded. One of the changes is that, subject to meeting certain conditions, they will apply to other qualifying activities, such as property businesses, and not just trading activities. – The change of ownership rules will be extended to cover companies which currently have no business, for example, dormant companies, and there will also be rules to cover unrealised losses.

1.2.4 Loans from close companies to their participators
Where loans are made from close companies to their ‘participators’ a tax charge is payable by the close company at a rate of 25% on any amounts outstanding nine months after the end of the accounting period. The Budget introduced three changes that have effect from 20 March 2013 to tackle avoidance: – the tax charge will apply to any loans from close companies to participators made via various intermediaries (eg partnerships, including LLPs); – the charge will also apply to transfers of value, other than loans; and – the repayment provisions will be amended to deny relief where repayments and re-drawings are made within a short period of time.

1.2.5 Review of loan relationships and derivative contracts legislation
The Government will consult on a package of proposals to modernise the corporation tax rules governing the taxation of corporate debt and derivatives with a view to legislating in Finance Bill 2014 and Finance Bill 2015. This will include measures both to clarify and strengthen the structure of the legislative regime and to update aspects of the detailed rules.

1.2.6 Partnership anti-avoidance consultation
The Government is to commence a consultation on the possible misuse of partnerships with a view to introducing legislation in Finance Bill 2014. The consultation will cover measures to:
– Remove the presumption of self-employment for partners in LLPs. – Counter the manipulation of profit and loss allocations by partnerships, including the use of a company, trust or similar vehicle to secure a tax advantage.

1.3 Personal Taxes

1.3.1 Rates and allowances
The reduction in the additional tax rate from 50% to 45% was confirmed and will take effect from 6 April 2013. The personal allowance for 2013/14 will be increased from £8,105 to £9,440, increasing to £10,000 in 2014/15. From 2015/16, it will increase in line with CPI. The basic rate band will be reduced from £34,370 to £32,010 meaning that higher rate taxpayers will benefit from only part of the increase in the personal allowance in 2013/14. The capital gains tax annual exemption for 2013/14 will be £10,900, and this will also increase by 1% per annum in 2014/15 and 2015/16 to £11,000 and £11,100 respectively. The 1% increase in the inheritance tax nil rate band from 6 April 2015, which was announced in the Autumn Statement, will now not go ahead and the nil rate band will remain at £325,000 until 2017/18.

1.3.2 Seed Enterprise Investment Scheme
The Chancellor announced an extension to the Seed Enterprise Investment Scheme (SEIS), introduced from 6 April 2012 to incentivise equity investment in small, early stage companies carrying on qualifying trading activities. Gains arising from reinvestments in SEIS companies during 2012/13 are fully relieved from CGT. This relief has now been extended in part. Gains arising in 2013/14 which are reinvested in qualifying SEIS investments will be subject to CGT at 50% of the normal rate.

1.3.3 Statutory residence
The Government has announced that certain aspects of the statutory residence test are being revised. These concern the operation of the split year residence rules for individuals who become or cease to be resident in the UK part way through the tax year, the way in which an individual establishes whether they are working full-time and the treatment of international transport workers eg aircrew, mariners etc. Details are expected to be published in the Finance Bill on 28 March 2013. The Government has also announced an amendment to the rules for claiming overseas workday’s relief. The transitional rules for individuals who arrived in the UK by 5 April 2013, and who are still resident at that date, will be amended to ensure that after 5 April 2013 they are able to claim overseas workdays on the same basis as currently.

1.4 Employment Taxes

1.4.1 Employee ownership: capital gains tax relief
A consultation is to take place regarding the introduction of capital gains tax relief on the sale of a controlling interest in a business into an employee ownership structure. The consultation will take into account the progress of the work by the Department for Business, Innovation and Skills and the Implementation Group on Employee Ownership to develop an ‘off the shelf’ employee owned company model. The intention is to introduce the relief in Finance Bill 2014.

1.4.2 Offshore employment intermediaries
The Government will consult on strengthening the obligation to ensure the correct amount of income tax and NIC is paid by offshore employment intermediaries. The aim is to introduce legislation in Finance Bill 2014.

1.4.3 Contracting out for defined benefit pension schemes
From 6 April 2016 members of defined benefit occupational pension schemes and their employers will no longer be able to ‘contract out’ of the State Second Pension. The State Second Pension will close to newly retired pensioners in 2016. Instead pensioners will receive a single-tier State Pension which will be greater than the current basic State Pension. This measure will affect both public sector and private sector employers who operate defined benefit pension schemes and their employees who are members of the schemes. Currently employers receive a contracted out rebate of 3.4% and employees a rebate of 1.4%. A statutory override will allow all private sector employees to cover the costs of additional NIC payments through increasing employee contribution rates or reducing future pension benefits for their existing schemes without breaking the employment contract.

1.4.4 Employment Allowance
From 2014/15 all businesses and charities will be entitled to a £2,000 Employment Allowance towards their employer NIC bill. The allowance will be delivered to employers through standard payroll software and HMRC’s Real Time Information system. Employers will only need to confirm their eligibility through their regular payroll processes.

1.4.5 Employer small loans limit
Currently beneficial loans provided by an employer give rise to a taxable benefit if the total of all such loans to an employee exceed £5,000 in the tax year. This £5,000 limit is to be increased to £10,000 from 6 April 2014.

1.4.6 Corporation tax deductions for employment share acquisitions
The Government has announced its intention to introduce legislation to preclude a corporation tax deduction for accounting charges booked under IFRS2/FRS20 in respect of share options or awards that have lapsed. The Government has stated that in its view this is not a change in the law but rather a clarification of the existing legislation.

1.5 Indirect Taxes

1.5.1 Abolition of Stamp Duty & Stamp Duty Reserve Tax (SDRT) on Junior Market Shares
Legislation is to be introduced in Finance Bill 2014 which will abolish, from 1 April 2014, stamp duty and SDRT on share transactions in UK companies quoted on growth markets such as the Alternative Investment Market and the ISDX Growth Market.

1.5.2 Abolition of SDRT: surrender of units in UK unit trust scheme or UK opened-ended investment company
The SDRT charge for which fund managers are liable when investors surrender their units in UK unit trust schemes or shares in UK open-ended investment companies will be abolished from 1 April 2014.
1.5.3 Targeted anti-avoidance rule for certain SDLT subsale schemes
SDLT subsale relief will be amended with retrospective effect by the insertion of a targeted anti-avoidance rule. The scheme involved artificial arrangements to defer the tax point for SDLT by up to 125 years. The amendment will apply to acquisitions of property completed after 20 March 2012.

1.6 Tax Administration

1.6.1 Tax and UK Government contracts
New rules will be introduced to allow Government departments to preclude companies and individuals who take part in failed tax avoidance schemes from being awarded Government contracts. These rules will apply to contracts with a value over £5 million and apply for tenders advertised after 1 April 2013. Following consultation, HMRC has today published an update which sets out the circumstances in which suppliers would be excluded from the bidding process. This will include suppliers whose tax returns are found to be incorrect under the new General Anti-Abuse Rule (or case law equivalent for indirect taxes); being party to a failed scheme under the disclosure of tax arrangements rules (DOTAS); being convicted for tax-related offences; or having incurred a penalty for civil fraud or evasion. The “look back” period (referring to the date at which non- compliance occurred) has been reduced from 10 to 6 years and suppliers will now only need to certify an occasion of non-compliance after 1 April 2013 and in respect of tax returns submitted on or after 1 October 2012.

1.6.2 Memoranda of Understanding: Jersey and Guernsey
The Government has today published separate but near-identical Memoranda of Understanding between HMRC and the Governments of Jersey and Guernsey relating to co-operation over tax matters. In a manner similar to the previous agreement with Liechtenstein and the recent agreement with the Isle of Man, the introduction is accompanied by the announcement of a window of time in which relevant persons may make a disclosure of previously undisclosed taxable income and receive the benefit of lower-than-normal penalties. Once the disclosure window closes, HMRC will seek to use information exchange to identify any taxpayers who have failed to come forward and will seek to impose severe penalties (which can be as much as twice the tax) or even undertake criminal prosecutions.
The terms of both disclosure facilities will be available from 6 April 2013 until 30 September 2016 and relevant persons may apply to join either of the facilities between these dates.

Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
© 2013 Deloitte LLP. All rights reserved.
Deloitte LLP is a limited liability partnership

A Landscape of Lies – film tax fraudsters guilty (HMRC)

A Landscape of Lies – film tax fraudsters guilty

13 March 2013 10:34
A gang who made a film solely as a £2.8 million tax scam have been convicted in the first prosecution for film tax relief fraud.
HM Revenue and Customs (HMRC) investigators found that the film, A Landscape of Lies, which it was claimed starred Hollywood A-list actors, was never intended for the big screen and was a sham production. The real intent was to defraud the public purse of nearly £1.5 million in VAT along with nearly £1.3 million in film tax credit claims.
Gang leader Bashar Al-Issa, 34, of Maida Vale, London, along with Aoife Madden, of Northern Ireland, Tariq Hassan, of Essex, Ian Sherwood and Osama Al Baghdady, both of Manchester, owned Evolved Pictures. They told their auditors that they had a budget of over £19 million provided by a Jordanian company to produce a blockbuster film in the UK.
Evolved Pictures told HMRC that millions of pounds of work had been spent on the film, including paying actors and film set managers, claiming this meant a VAT repayment was due of £1,488,187. However, during checks HMRC found that the work had not been done and most of the so-called suppliers and film studios had never heard of the gang. Furthermore, capitalising on a scheme designed to support genuine British film makers, Evolved made fraudulent tax credit claims of £256,385.50, while preparing to submit a further claim of £1,033,337.

However, after they were arrested, the gang came up with an elaborate plan to cover their tracks and hide the fraud by shooting a film on a shoestring called “A Landscape of Lies” featuring two television personalities.

John Pointing, Assistant Director of Criminal Investigation at HMRC, said:

“This gang thought they could exploit rules for genuine British filmmakers and thieve from the public purse for their own gain. They were wrong as HMRC will not stand by and let that happen.

“Falsely claiming VAT that is not due is illegal – so we are pleased that instead of this film flop going straight to DVD, these small-screen z-listers could go straight to jail.”

Sentencing will take place on 25 March 2013. Confiscation proceedings are underway.

Notes

1. Bashar Al-Issa, DOB 13/03/1978, of Maida Vale, London, was convicted on 12 March 2013 of two counts of conspiracy to cheating the public revenue, at Southwark Crown Court.

2. Aoife Madden, DOB 01/08/1981, of Northern Ireland, pleaded guilty was convicted of two counts of conspiracy to cheat the public revenue at Southwark Crown Court.

3. Tariq Hassan, DOB 18/09/1960, of Ilford, Essex, was convicted on 12 March 2013 of one count of conspiracy to cheat the public revenue, at Southwark Crown Court.

4. Ian Sherwood, DOB 21/07/1959, of Sale, Manchester, was convicted on 12 March 2013 of one count of conspiracy cheating the public revenue at Southwark Crown Court.

5. Osama Al Baghdady, DOB 01/02/1971, of Crumpsall, Manchester, was convicted on 12 March 2013 of one counts of conspiracy cheating the public revenue at Southwark Crown Court.

6. Film tax relief is administered by HMRC and is available to legitimate film makers for British films that are intended to be shown commercially in cinemas and of whose total production costs at least 25 per cent relates to activities in the UK.

Former tax association president jailed for tax fraud (HMRC)

Former tax association president jailed for tax fraud

05 March 2013 14:43
A former president of the Association of Taxation Technicians (ATT) and a fellow company director have been jailed for eight and half years each for a £5 million pension scheme tax fraud.
Andrew Meeson and associate Peter Bradley were both found guilty of the conspiracy which centred on two pension schemes administered by their company, Tudor Capital Management Limited.

HM Revenue and Customs (HMRC) investigators found that between June 2007 and March 2010 they received income tax repayments amounting to £5 million. The two claimed that this was the refund due on £20 million of contributions that pension scheme members had made. The investigators found these contributions did not exist.

Simon De Kayne, Assistant Director of Criminal Investigation for HMRC, said:

“This was blatant theft from the UK economy by people who exploited their positions of trust and authority. This prosecution reinforces our effectiveness in the crackdown to uncover and bring before the courts those involved in tax evasion and fraud.”

They were arrested in 2010 in dawn raids carried out by HMRC officers investigating the multi-million pound fraud. The raids took place at residential and business premises in the West Midlands and Derby.

In addition, a trustee of the pension fund, Steven Price, pleaded guilty to obtaining documents by deception, and was given an 18 month prison sentence – suspended for two years.

Confiscation proceedings to reclaim the crime profits are now underway.
Notes
1. Photographs of the defendants are available on request or on HMRC’s flickr site http://www.flickr.com/hmrcgovuk

2. Details of the defendants sentenced today, 5 March 2013, at Birmingham Crown Court:

Andrew Meeson (DOB 10.06.61) former President of the Association of Taxation
Technicians, of George Street, Wolverhampton, West Midlands, was found guilty and sentenced to eight and a half years in prison.
He was disqualified from being a company director for six years.
Meeson was a company director of Tudor Capital Management Limited and involved in administering numerous company pension schemes.

Peter Spencer Bradley (DOB 08.02.67) of The Forge, Springhill Lane, Lower Penn,
Wolverhampton, West Midlands, was found guilty and sentenced to eight and a half years in prison.
He was disqualified from being a company director for six years.
Bradley was a company director of Tudor Capital Management Limited.

Both were charged with Conspiracy to Cheat the Revenue after being summonsed to appear at Birmingham Magistrates Court on 31 October 2011.

Steven Price (28.07.64) of Pine Tops, Pratts Lane, Mappleborough Green, Studley, West Midlands, pleaded guilty and was sentenced to 18 months in prison, suspended for two years, and fined £100,000, to be paid within six months or be sent to jail for two years.
Price was alleged to be the trustee of a company pension scheme.

Price pleaded guilty to charges of attaining documents by deception under the Theft 1968.

3. In conjunction with HMRC executing the search warrants in 2010, the Pensions Regulator took action to suspend Tudor Capital Management Ltd from acting as trustees for pension trust schemes.

Extra 10 years in jail for £38 million fraudster (HMRC)

Extra 10 years in jail for £38 million fraudster

04 March 2013 09:24
Convicted criminal Jasbinder Bedesha will be spending a further 10 years in jail for failing to pay a £14 million confiscation order after a hearing last week at Leamington Spa Crown Court.
The fraudster was jailed for seven and a half years in 2008 for his role in a conspiracy to steal £38 million in a ‘missing trader’ VAT fraud after an investigation by HM Revenue and Customs (HMRC).

Dave Cowie, Assistant Director of Criminal Investigation for HMRC, said:

“Yesterday’s judgment shows we will pursue every avenue to return the proceeds of crime to the nation or defendants will face severe consequences. We will continue our investigations to track down the money we believe Bedesha has hidden overseas.

“This was a planned and ruthless attack to steal vast amounts of public money, which enabled this criminal gang to fund lavish and luxurious lifestyles. Their focus was to get rich quick and avoid detection by laundering the proceeds of their crime overseas. They enjoyed extravagant lifestyles, exclusive homes, performance cars and designer jewellery – ultimately at the expense of law abiding tax payers.”

HMRC was also granted a Serious Crime Prevention Order and a Financial Reporting Order against Bedesha.

The multi-million pound attack on public funds in 2005 was uncovered by HMRC criminal investigators who unravelled a complex conspiracy of deceit involving a chain of VAT registered companies, both here and abroad, set up solely for the purpose of stealing money from the UK government.

The conspiracy involved the import of mobile phones and computer processing units (CPUs), mainly from Dubai via Europe. Once in the UK, the goods would be sold on through a series of companies, but with VAT added. Once the goods had been sold on a number of times they would be exported back to the EU. The exporter would then claim a VAT credit from HMRC for the VAT paid on the purchase of the goods – although this was never paid in the first place.

This money would then be siphoned off and laundered through overseas companies in Dubai and Spain and the gang would divide the dishonest profits of the fraud.

Notes

1. A photograph of the defendant is available on request or from HMRC’s flickr site http://www.flickr.com/hmrcgovuk .

2. Details of the defendants sentenced on 4 February 2011 can be found at
http://hmrc.presscentre.com/Press-Releases/Crime-gang-jailed-for-38-million-fraud-66023.aspx

3. Jasbinder Singh Bedesha (DOB 26.07.61) currently of HM Prison Service and formerly of Arabian Ranches, Dubai, UAE, was issued with a confiscation order for £14,019,439 to be paid by 28 February 2013 or face a default sentence of ten years in prison. As the confiscation amount hasn’t been paid the default sentence will come into effect.

4. The Serious Crime Prevention Order includes:

– A worldwide travel ban for five years

– Banned contact with 15 named people

– Restriction to one mobile phone and limited internet use

– Cash restriction of £1,000

– Any breach will result in an additional five year prison sentence.

5. The Financial Reporting Order includes:

– A requirement to report financial affairs every three months for the next fifteen years.

– Any breach will result in an additional 51 weeks in prison to run consecutively.

6. Details of other sentences and confiscations:

– Stephen Stark (DOB 01.08.47) of College Gardens, Chingford, London, was issued with a confiscation order for £202,026 by 17 October 2012 or face a further two and a half years in prison. He has only paid £15,411 and enforcement proceedings are underway.

– Daamin Kaif (DOB 27.01.71) of Badgers Hill, Virginia Water, confiscation hearing due to take place during 2013.

– Duminda Thantrimudali (DOB 13.09.73) of Thames Avenue, Perivale, Greenford, Middlesex, confiscation hearing due to take place during 2013.

– Baljinder Singh Sandhu (DOB 01.04.69) formerly of Moorland Road, Whitmoor Park, Coventry was issued with a confiscation order for £326,615 to be paid by 13 May 2013 or face a further four years in prison.

– Mario Vocaturo (DOB 29.08.64) of Woodborough Road, Mapperley, Nottingham, was issued with a confiscation order for £1 and has been paid.

– Iqbal Singh Gandham (DOB 26.01.75) of Cherry Orchard Road, Handsworth Wood, Birmingham was sentenced to two and a half years in prison. Gandham pleaded guilty to charges of Conspiracy to Cheat the Public Revenue under the Criminal Law Act 1977 and Money Laundering under the Proceeds of Crime Act 2002. He was issued with a confiscation order for £67,000 to be paid by 17 July 2013 or face a further 18 months in prison.

– Harnaik Singh Sandhu (DOB 19.07.74) of Mulberry Road, Courthouse Green, Coventry was issued with a Confiscation Order of £600,000 to be paid by 18 May 2013 or face a further four years in prison. He has failed to pay and is currently serving an extra four years in prison.

– Convicted fraudster Malcolm Edwards-Sayer (DOB 27.10.58) of Bramcote, Nottingham was sentenced to 12 months in prison. He was involved in the generation of false documentation to carry out the fraud.

– Edwards-Sayer, a former law lecturer and lay preacher, was previously sentenced to six and a half years in prison on 29 November 2007 in a linked case, Operation Gnawed. He also received a further three and a half years to run consecutively for 16 counts of deception on charges brought by Nottingham Police for pretending to be a solicitor.

Film scheme didn’t do what it said on the can (HMRC)

Film scheme didn’t do what it said on the can

01 March 2013 11:43
A tax avoidance scheme marketed by Goldcrest Pictures Limited to some of the wealthiest people in society has failed to live up to its promise. The Tax Tribunal has ruled that the scheme, which was based on buying and selling film rights, simply didn’t work. Users not only had to pay the tax owed with no relief at all for the money they put into the scheme, but also ended up out of pocket as a result of paying fees to the company.
Goldcrest have been responsible for a string of critically and commercially successful films including Gandhi, The Killing Fields, Chariots of Fire and A Room with a View.

A Goldcrest company, based in the British Virgin Islands, sold rights in two feature films for an artificially inflated figure of £21.9 million to Patrick Degorce – a hedge fund manager – who was, in fact, only required to pay £4.8 million of his own money. He immediately sold the rights back to the same Goldcrest company for a fraction of this price – claiming that the difference was a trading ‘loss’. He aimed to set this ‘loss’ against £18.8 million profits of his hedge fund – so he wouldn’t have to pay any tax on them.

In a comprehensive win for HM Revenue and Customs (HMRC), the Tribunal ruled strongly against the scheme.

David Gauke, Exchequer Secretary to the Treasury said:

“The Government has made it clear that we will not allow marketed avoidance schemes to deprive the UK of vital tax revenues. We have invested nearly £1 billion to help HMRC take action against the minority of taxpayers who think they are above the law, we are bringing in new anti-avoidance legislation and we are giving HMRC greater powers to clamp down on those who sell dubious avoidance schemes like this one.

The Tribunal’s ruling in this case sends a clear message to anyone tempted to buy into this type of scheme.”

Jim Harra, HMRC Director-General, Business Tax said:

“This is another film scheme which has delivered none of the tax benefits promised by the promoter.

“Mr Degorce put in nearly £5 million of his own money, including £1.6 million which went into the promoter’s pocket, but all he has come away with is an HMRC enquiry and an appearance before a tax tribunal.

“Sadly, many people have been tempted by similar schemes which we also believe don’t work, and we have opened a settlement opportunity to get them back on the straight and narrow. I would urge anyone in this position to sign up for this facility quickly.”

Notes

1. This is the third in a ‘hat-trick’ of important successes at Tribunal in HMRC’s drive against tax avoidance.

The others were:

– the abuse for tax avoidance purposes of reliefs put in place to support medical research.
– the Chappell case, which if successful, could have made paying income tax voluntary.
2. Patrick Degorce claimed losses in the first year of the scheme in 2006/07 of £18.8 million, putting tax at risk of £7.5 million.

3. Eleven other individuals used the Goldcrest scheme (they are also bound by the Tribunal decision) with total combined losses of £47.6 million risking £17.7 million of tax.

4. In the last few weeks HMRC has sent thousands of letters to people involved in such so-called sideways loss relief schemes, to make them aware of the importance of settling their tax liabilities by agreement, without the need for litigation. More details are available at: http://www.hmrc.gov.uk/press/settle-opp-tax-avoid.htm

5. Established in 1977, Goldcrest has financed, produced and/or distributed a large number of commercially and artistically successful films and television programmes including : Chariots of Fire, Gandhi, The Killing Fields and A Room with a View.
6. Follow HMRC on Twitter @HMRCgovuk

7. HMRC’s Flickr account http://www.flickr.com/hmrcgovuk