TWO BUSINESSMEN have been jailed for tax evasion and fraud after hiding £500,000 offshore bank accounts.
Roderick Smith and Steven Howarth had the opportunity to disclose their offshore accounts through HM Revenue & Customs' Offshore Facility (ODF) in 2007. Smith only disclosed one of the 12 accounts he controlled overseas - his actions were compounded by failing to inform his accountant. Howarth did not register for the ODF.
The men, who ran Goldlogic Control Systems, a company offering computer technology to the automotive industry and had many of their clients based in Germany, did not register their true level of sales with HMRC, placing their profits in bank accounts in the Isle of Man.
After alerts from the German tax authorities, HMRC investigators found that the men evaded around £500,000 in UK income tax over a six-year period.
HMRC's assistant director of criminal investigation Mike Preston said that Smith and Howarth stole from UK taxpayers, using the money that should have paid for public services to fund luxury lifestyles filled with "prestige cars and expensive holidays". Failure to declare the true levels of sales in Europe and pay tax due on these earnings means both men must now "face the consequences" of their actions in jail.
He added: "HMRC is clamping down on tax evasion and targeting UK taxpayers using offshore accounts to disguise their wealth."
HMRC identified sales totalling £1,255,615 in Germany, while only £49,650 of this money in sales for the same period was declared by the men. The balance was divided into offshore accounts of five shell companies registered in Mauritius and the Isle of Man, created solely for the purpose of tax fraud.
Smith was jailed for 15 months and Howarth for 12 months. Confiscation orders were issued under Proceeds of Crime legislation in respect of Smith for £300,000 and Howarth for £200,000. These must be paid within 24 months or the men will be jailed for a further 15 and 12 months respectively.
Judge Warnock, in summing up, said the men "cheated the Revenue, and therefore this country, by evasion of income tax", adding that the crimes were motivated by "greed and selfishness".
"Only sentences of imprisonment are appropriate in respect of the offences you have committed. To suspend these sentences would offend any reasonable sense of justice on the part of the honest taxpayer."
Court costs of £5,000 must be paid by both men. Smith has already paid £40,000 under the OFD scheme.
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.