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.
Richard Le Tocq, head of Locate Guernsey, discusses the chancellor’s approach to high net worth individuals, and why relocation is increasingly attractive to HNWIs
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform
Legislation on the NICs changes to be brought forward in the autumn following publication of 'the full effects of the changes to Class 2 and Class 4' in the summer