October 2019 Tax Investigation Round Up

October's round up of the latest tax investigation news and cases:

• Fraud barrister disbarred for tax fraud
• Goals admits final tax fraud bill may be much higher than feared
• BBC presenters lose in IR35 ‘chaos’
• Haulage boss and accountant jailed over tax fraud
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Fraud barrister disbarred for tax fraud

In an ironic turn of events, a barrister who specialised in fraud cases has been disbarred as a result of committing tax fraud himself.

Peter Moss was a tenant at Linenhall Chambers in Chester prior to the disbarring, which occurred due to his failure to submit self-assessment returns since 1999, as well as 26 VAT returns. Despite earning over £600,000 between 2008 and 2016, Moss admitted to not filing any returns but also made the surprising claim of not knowing that it was an offence to not do so.

Taking place at Leeds Crown Court, Moss said that he was in debt to numerous people and used a system of simply responding to “whoever shout[ed] the loudest”. This is believed to have cost HMRC £138,500 in unpaid tax returns.

Jailed for 18 months in June 2018, Moss has also been disbarred by an independent disciplinary tribunal on the grounds that his actions are likely to damage the trust and confidence that the public places in the profession.

Goals admits final tax fraud bill may be much higher than feared

Goals Soccer, the Scottish five-a-side football pitch operator, originally estimated that it owed HMRC £12 million in unpaid tax. However, it is now facing the possibility that the total amount could be much higher.

A spokesperson from the company has confirmed that it is endeavouring to resolve the issue of wrongly declared VAT, which was intentionally committed by a small number of individuals from within the company.

Shares in the company have now been removed from the stock market due to the precarious position of its finances. However, Goals stated that this will not affect its plans to sell the business, with a potential cash offer coming from Mike Ashley of Sports Direct. The offer was taken to the Goals board, with Sports Direct, which has an 18.9% stake, suggesting 5p a share. This is less than 25% of the share price at the time of suspension, with Sports Direct saying that it would allow shareholders an opportunity to exit.

A possible alternative outcome is that shares in Goals are cancelled completely, therefore losing their marketability.

BBC presenters lose in IR35 chaos

The employment status of three BBC presenters who used personal service companies (PSC) has been decided in a First Tier Tribunal (FTT) case. HMRC won the case in an IR35 ruling, which involved over £300,000 in tax. Experts have said that this threatens to further add to the chaos around how the employment rules should be applied.

The presenters in question were David Eades, Tim Willcox and Joanna Gosling, employees of the BBC News and BBC World channels. Evidence was given that each presenter was told by the BBC that they each needed to set up a PSC to receive their payments from 2003 and 2004 until 2014, at which point all three became employees of the BBC. Despite HMRC issuing tax demands that amounted to £920,000, of which around £600,000 had been paid, £300,000 was still outstanding, consisting mainly of national insurance payments.

The judges at the tribunal disagreed about the IR35 status of the presenters and came to the conclusion that the BBC took advantage of the opportunity to pressurise them into contracting through PSCs. As a result, they accepted lower salaries and the tax risk and liability was transferred from the BBC to the PSCs, unbeknownst to the presenters.

The tribunal stated that there was ‘sufficient mutuality and at least a sufficient framework of control to place the assumed relationships between the BBC and the presenters in the employment field’.

Though the FTT found that the presenters and their accountants acted in good faith in taking the view that IR35 did not apply, HMRC won the case. However, it was far from a swift process, as it took eight years for the case to reach the FTT, nine days to be heard in May 2018, and a further sixteen months for the case report to be published.

This is the fifth case involving TV and radio presenters being accused of not complying with the IR35 rules in respect of contracts performed through PSCs, which raises the issue of clearer categorisation and processes being required in order to prevent future court cases. Regardless, it is believed that around 100 other BBC presenters have provided services via PSCs, which makes it highly likely that similar cases will soon arise.

Haulage boss and accountant jailed over tax fraud

Barry Anderson (70) of HL & RV Anderson Ltd and Christopher Alecock (63), the company accountant, who were both company directors, lied to employees in regards to National Insurance Contributions (NICs) and Income Tax. Overall, £58,968.87 had been deducted from staff wages between July 2012 and June 2015, despite the deductions not having actually been made.

HMRC investigations were carried out and it was found that Anderson and Alecock had also swindled customers by using a deregistered VAT number on invoices. This allowed them to claim a further £68,733 in VAT payments, which were not sent to HMRC.

The verdict took place at  Cambridge Crown Court on 5 September 2019, where the pair was found guilty of two counts of cheating the public revenue. Each received a sentence, with Alecock receiving three years in prison and Anderson being sentenced to 30 months in prison.