HMRC fraud squad net £1bn from criminals

HMRC’s Fraud Investigation Service (FIS) was launched in April 2016. The FIS is responsible for HMRC’s civil and criminal investigations into the most serious fraud and wrongdoing. It has been estimated that tax evasion and fraud cost the exchequer up to £10bn per annum.

The formation of the FIS brought together HMRC’s criminal and civil investigators. This partnership allows HMRC’s investigators to unlock the most complex financial crimes. Since the service was established more than £1 billion has been recovered from the proceeds of crime and tax offenders. 

The FIS has been proactively pursuing the suspected proceeds of crime using enforcement powers, both criminal and civil, to disrupt the movement of cash and assets.

HMRC has reported that since 2016, more than 1,200 seizures of cash and assets have been made while on operational duty, including gold bars worth £750,000 from a passenger at Manchester Airport and £48,000 found in a freezer drawer, hidden among chicken nuggets at a house in Blackpool.

HMRC’s Director of Fraud Investigation Service, said:

‘To reach this £1 billion milestone in 5 years speaks volumes to the dedication, hard work and skill of FIS to recover the proceeds of crime from those who try to cheat the system.’

Criminal cash can be seized by HMRC officers under the Proceeds of Crime Act 2002. In addition, Account Freezing Orders can be used to freeze balances in bank accounts where it is suspected they contain criminal money.

Beware online sales scams

A new government press release has been issued reminding the public that online sales scams continue to be a major issue. In fact, 2021 saw a record number of cyber-attacks and online scams. 

Action Fraud, the national reporting centre for fraud and cyber-crime, has revealed that almost 100,000 people in the UK have fallen victim to online shopping fraud in the past 13 months. This has seen over £60 million being reported lost.

The National Cyber Security Centre (NCSC) is encouraging people to shop online securely by following five actionable steps:

  1. Keeping accounts secure – strong and separate passwords should be used for the most important online accounts, including email, banking or payment accounts (such as PayPal). The NCSC recommends using three random words to create a password. Turning on two-step verification can add an extra layer of protection.
  2. Be aware of emails, text messages or websites that look too good to be true or suspicious – many scammers set up fake messages designed to steal financial and personal information. Members of the public can report suspicious messages to the NCSC via text to 7726 and email to report@phishing.gov.uk.
  3. Choose online retailers carefully – research stores before buying to confirm they are legitimate – check via trustworthy consumer websites. Certain emails or texts regarding "too good to be true" offers may contain links to fake websites. If unsure, don’t use the link.
  4. Use a credit card for online payments if possible – most major credit card providers protect online purchases and are obliged to refund individuals in certain circumstances.
  5. Only provide enough details to complete a purchase – only fill in the mandatory details on a website when shopping online (often marked with an asterisk).

Plug-in grants for electric vehicles

The government has announced significant changes to the low-emission vehicles plug-in grant scheme. The changes became effective on 15 December 2021. The changes have been introduced in response to soaring demand for electric vehicles and to help target those buying the most affordable zero emission cars. More than 10% of cars sold in 2021 were electric.

Under the previous rules a grant of up to £2,500 was available for qualifying cars with an 'on the road' price cap of up to £35,000. From 15 December 2021, the government will provide grants of up to £1,500 for electric cars priced under £32,000. There are currently estimated to be 20 models on the market that would qualify. The support for wheelchair accessible vehicles is being prioritised, these will retain the £2,500 grant and a higher £35,000 price cap although there are a limited number of grants available.

There are also grants available for specified motorcycles, mopeds, small vans, large vans, taxis and trucks. Grant rates for the plug-in van grant are now £5,000 for large vans and £2,500 for small vans, with a limit of 1,000 per customer per year. Motorcycle and moped grants have also changed, with the government now providing £500 off the cost of a motorcycle, and £150 for mopeds, with a price cap on vehicles of £10,000.

The plug-in grant scheme was first launched in 2011 and is available across the UK with dealers using the grant towards the price of eligible new cars. The paperwork for the grant application is handled by the dealer selling the vehicle.

The scheme is open to qualifying purchases by private individuals and businesses.

BOE advises government on inflation hike to 5.1%

The current Governor of the Bank of England, Andrew Bailey, has written to the Chancellor of the Exchequer, Rishi Sunak. The letter was dated 16 December 2021 and has been uploaded to GOV.UK. The correspondence related to the recently published figures from the Office for National Statistics (ONS) showing a significant increase in inflation to 5.1%.

The letter addresses the following:

  • the reasons why inflation has moved away from the 2% target, and the outlook for inflation;
  • the policy action that the MPC is taking in response;
  • the horizon over which the MPC judges it is appropriate to return inflation to the target;
  • the trade-off that has been made by the MPC with regard to inflation and output variability in determining the scale and duration of any expected deviation of inflation from the target; and
  • how this approach meets the Government’s monetary policy objectives.

CPI inflation is expected to remain around 5% through the majority of the winter period, and peak at around 6% in April 2022. 

The judgement in HMRC v Tooth

A recent Supreme Court decision examined in some detail HMRC’s powers in relation to issuing a discovery assessment. HMRC generally use discovery assessments where the statutory time limit for looking into a return has expired.

If certain conditions are satisfied, then HMRC can make a discovery assessment:

  • 4 years from the end of the year of assessment in which the further liability to tax arises where the loss of tax is not due to careless or deliberate behaviour
  • 6 years from the end of the year of assessment in which the further liability to tax arises where the loss of tax is due to careless behaviour of the relevant person.
  • 20 years from the end of the year of assessment in which the further liability to tax arises where the loss of tax is due to deliberate behaviour of the relevant person.

The case in question centred on two main issues. Firstly, whether there had been a deliberate inaccuracy in a 2007-8 tax return enabling HMRC to issue a discovery assessment within the extended 20-year limit and secondly, whether HMRC had made a valid discovery.

The First-tier Tribunal (FTT), the Upper Tribunal (UT) and the Court of Appeal all decided that HMRC could not assess the taxpayer. The Supreme Court held that the interpretation of the tax return by HMRC did not properly consider the whole document and that there was no inaccuracy. Commenting further, the Judges opined that even if there was, they would not have been satisfied that such an inaccuracy was deliberate. The Supreme Court also rejected the notion of 'staleness' in respect of the discovery assessments.

Plug-in grants for electric vehicles

The low-emission vehicles plug-in grant can help you save up to £2,500 on the purchase price of new low-emission vehicles. The scheme was first launched in 2011 and is available across the UK with dealers using the grant towards the price of eligible new cars. The paperwork for the grant application is handled by the dealer. The scheme is open to qualifying purchases by private individuals and businesses.

HMRC publishes a list of qualifying cars and only cars listed are eligible for the grant. There are also grants available for specified motorcycles, mopeds, small vans, large vans, taxis and trucks.

The grant is available for cars with CO2 emissions lower than 50g/km and a 'zero-emission' range of at least 112km. To qualify for the grant, the cars must have an 'on the road' price cap of less than £35,000. This means that many popular environmentally friendly electric cars are not available under the scheme as their sale price exceeds the price cap.

There are separate criteria for other vehicle classes. This includes motorcycles, mopeds, small vans, large vans, taxis, small trucks and large trucks. For example, for motorcycles that have no CO2 emissions and can travel at least 50km between charges.

Government agrees OTS recommendations

The Office of Tax Simplification (OTS) was established in July 2010, to provide advice to the Chancellor of the Exchequer on simplifying the UK tax system. The Financial Secretary to the Treasury has recently written an extensive letter to the OTS regarding the conclusions of the first five-year review and to respond to the OTS reviews into Inheritance Tax (IHT) and Capital Gains Tax (CGT).

The letter confirms that after careful consideration, the government has decided not to make any changes to the IHT lifetime gifts rules at the current time. It was also confirmed that changes to the design and operation of CGT will be kept under review.

The government has accepted the following five recommendations from the OTS report on the technical and administrative issues with CGT:

  1. Integrate the different ways of reporting and paying CGT into the Single Customer Account. This is part of a long-term strategy.
  2. Extending the reporting and payment deadline for the UK Property return to 60 days. This has been completed.
  3. Extending the ‘no gain no loss’ window on separation and divorce. This will be subject to consultation over the course of the next year.
  4. Expanding the specific Rollover Relief rules which apply where land and buildings are acquired under Compulsory Purchase Orders (CPO). This will be subject to a final consultation. 
  5. Various improvements in CGT guidance on specific areas. HMRC has already completed a review and expansion of the guidance on the UK Property Tax Return and will proceed in other areas identified in the OTS report.

The government will also consider five other recommendations by the OTS including the treatment of separate share pools, the practical operation of Private Residence Relief nominations and a review of the rules for enterprise investment schemes.

Steps to modernise UK tax system

At the Autumn Budget 2021, it was announced that there would be a dedicated day this Autumn where the government would set out further plans to continue building a modern, simple and effective tax system. This 'day' was on 30 November 2021, and referred to by HMRC as the aptly named, Tax Administration and Maintenance Day.

A number of documents were published including:

  • An update on reforms to Small Brewers Relief.
  • A technical consultation setting out further detail on the conclusions to the government’s review of business rates.
  • A report on Research and Development (R&D) tax reliefs, providing further details on announcements made at the Budget which included refocusing relief in the UK, targeting abuse, and supporting innovation by expanding qualifying expenditure to capture cloud and data costs. 
  • A Call for Evidence on reforming registration for Income Tax Self-Assessment (ITSA) to give taxpayers a better understanding of their tax obligations and support available to them.
  • Publishing a summary of responses to the Call for Evidence on the Tax Administration Framework Review (TAFR), including plans to reform several areas of the tax administrations system to simplify and modernise it.
  • A Call for Evidence on the role umbrella companies play in the labour market to improve our understanding of the sector.
  • Publishing the first five-year review of the Office of Tax Simplification (OTS) launched in March 2021 to examine the effectiveness of the OTS.
  • A consultation on potential changes to the Stamp Duty Land Tax reliefs for mixed-property and multiple dwellings to ensure they operate fairly and to reduce the scope for misuse.

New warnings from HMRC re tax fraudsters

Fraudsters are continuing to target taxpayers with scam emails in advance of the 31 January 2022 deadline for submission of Self-Assessment returns. In fact, over the last year, HMRC received nearly 360,000 reports about bogus tax rebate referrals. 

A number of these scams purport to tell taxpayers they are due a rebate / refund of tax from HMRC and ask for bank or credit card details in order to send the fake tax refund. The fraudsters use various means to try and scam people including making contact by phone calls, texts or emails. Fraudsters have also been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC operates a dedicated Customer Protection team to identify and close down scams but continues to advise taxpayers to identify fraud and avoid becoming victims themselves. For example, HMRC will only contact taxpayers due a refund by post and never use emails, text messages or external companies for this activity. Genuine organisations like HMRC and banks will not contact customers asking for their PIN, password or bank details.

If you think you have received a suspicious call or email claiming to be from HMRC you are asked to forward the details to phishing@hmrc.gov.uk and text to 60599. If you have suffered financial loss, you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

If clients ask – trading hours for retailers

There are special rules that govern the trading hours that certain retailers must follow on a Sunday. These rules are defined in the Sunday Trading Act 1994 and apply to shops in England and Wales. The Act restricts the trading hours for retailers with a sales area that exceeds 280 square meters. Small shops in England and Wales are free to open on whatever days and hours they choose. There are no trading hours restrictions in Scotland.

Shops over 280 square metres:

  • Can open on Sundays but only for 6 consecutive hours between 10am and 6pm.
  • Must close on Easter Sunday.
  • Must close on Christmas Day.

Any shop affected by these rules must clearly display their opening hours both inside and outside their shop. There are also certain large shops that are exempt from these rules, including airport and railway station outlets, service station outlets and registered pharmacies.

There are similar rules in Northern Ireland, but large shops can only open between the fixed hours of 1pm and 6pm on a Sunday.