We were recently instructed on a case involving 3 Defendants, all of whom had previously served time.
Some time after they devised an ingenious, and legal, way to attract clients who were entitled to tax refunds and they set themselves up with HMRC as tax agents. They were so successful that tax repayments were pouring in to their office. HMRC were convinced that the Defendants were committing fraud so they closed down their operation and investigated most of the 500 or so clients that had been signed up.
The case of HMRC was that the tax repayments due to the clients of the Defendants were fraudulently incorrect because false information had been included on the Income Tax Returns and this resulted in excessive tax repayments approaching £2,000,000.
In total we considered well over 50 lever-arch files of evidence. We considered in detail the Witness Statement evidence of the Prosecution in respect of the tax-payers whom they had interviewed and we found a significant number of inconsistencies and anomalies when comparing these statements to the actual income tax returns of these same clients. Following our first report we concluded that the clients’ tax returns were not criminally incorrect.
We then identified some comparator tax advisers who were doing similar work to the Defendants. We compared the evidence on some 100 of these comparator clients’ tax returns and showed that they were not materially different to the Defendants’ clients’ returns. We also pushed for, and got, permission to see the full files as held by HMRC of around 200 of the Defendants’ clients and showed that there were numerous reasons as to why there was no criminality by the Defendants.
While the Prosecution sought to disparage our work in one of the CMC hearings and tried to stop our reports from being submitted the judge commented:-
“I find Mr Frenkel’s reports particularly helpful”.
A few weeks after that Hearing and comment the Prosecution dropped all charges against all 3 Defendants. It was a fantastic result and was greatly appreciated by the Defendants and our instructing solicitors.