Hartnett gunning for tax haven advisers

dave hartnett, hmrc

Dave Hartnett, HMRC

The outgoing chairman of
HM Revenue & Customs
has warned it will launch criminal prosecutions against accountants who have
stashed clients’ money in offshore tax havens to duck paying UK taxes.

HMRC has given British investors in tax havens such as Liechtenstein a chance
to come clean in exchange for reduced penalties. But it is now poised to turn up
the heat on wealthy tax dodgers and their accountants.

In an interview with Accountancy Age, acting HMRC chairman Dave
Hartnett said it was determined to crack down on a minority of repeat offenders
in the profession who advise clients on using tax havens illegally.

He said that HMRC was building a detailed picture of rogue accountants as
part of an investigation into rich investors who have hidden money in Europe and
the Channel Islands.

If HMRC finds an accountant is involved in illegal offshore tax activities it
will consider investigating all the clients of the accountant in an effort to
reduce lost tax revenue.

Last year HMRC raised £400m after British taxpayers with money in offshore
accounts run by high street banks were offered leniency in return for voluntary

‘We are constantly building up intelligence on firms that help their clients
into any sort of [illegal] offshore arrangement,’ Hartnett told Accountancy
. ‘Every individual we investigate in relation to Lichtenstein we will
ask how [their money] found its way to Liechtenstein and we may pursue that
enquiry quite vigorously until we understand it.

‘If we find a dishonest accountant we will automatically prosecute and the
tax world knows this.’

HMRC is using powerful software to compile evidence of accountants linked to
offshore tax evasion. This could pave the way for prosecutions of accountants if
they are shown to be complicit in a client’s offshore affairs, which is classed
as fraud.

‘We have got more successful at rooting out tax advisers who are maybe not as
as they should be,’ Hartnett said.

‘Because we are identifying more people with offshore accounts we are better
informed today than we have ever been before about how they have found their way
into the offshore environment.’

He said that HMRC hoped to start its first prosecution of an investor over
offshore evasion within months. He added that the 300 British investors with
Lichtenstein-based bank accounts ranged from professional investors and writers
and featured some ‘household names’.

Tax experts broadly welcomed Hartnett’s comments. Bill Dodwell, tax partner
at Deloitte, said: ‘I’m absolutely certain that the accounting profession and
all our regulators are completely united on this. Nobody wants to encourage
criminal activity.’

He said the ‘vast majority’ of private investors using offshore accounts
illegally probably do so without seeking advice from accountants. ‘If you are
stashing money offshore would you want a third party involved?’

John Whiting, chairman of management of taxes committee at the Chartered
Institute of Taxation, said accountants welcomed the HMRC’s distinction between
illegal tax evasion and legal tax planning and avoidance.

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