Jailing scheme barristers and advisers would avoid loan charge scandal rerun, HMRC told

Eminent barristers on conspiracy charges and promoters extradited back to the UK are among the criminal prosecution actions HMRC should take to deter a loan charge scandal rerun.

Issuing these recommendations directly to the Revenue, TaxWatch said the department ought to take the approach it took in 'R vs Charlton,' a case which related to schemes in the 1980s.

The charity points out that, in the case, prosecutions were brought against three accountants and a barrister for their roles in the design, operation and promotion of a failed avoidance scheme.

'Crystal clear'

All of the defendant received custodial sentences --  a punishment that TaxWatch’s George Turner says would be fitting today for anyone found touting disguised remuneration models.

“I do not see how anyone operating a disguised remuneration scheme in 2020 can be doing anything other than trying to scam their clients,” the charity’s tax director told ContractorUK.

“The government and parliament have been crystal clear that these schemes are not acceptable and will be closed down.

“[So] anyone selling these schemes today must be aware of that and are as such engaging in a criminal level of irresponsibility.”

'QCs should be held to be part of a conspiracy'

Mr Turner makes this point in a new six-page submission to HMRC, issued in response to the department’s now-closed consultation on tackling disguised remuneration.

But it’s not just those individuals who directly sell such arrangements who he believes should face criminal investigation.

“Leading QCs, some of whom have risen to very prominent positions, and at least one that has become a member of the judiciary, have been involved in the design of disguised remuneration schemes,” Mr Turner tells HMRC in his submission.

“Barristers who are involved in providing opinions for disguised remuneration schemes must be aware that their advice will be used as a marketing tool to encourage people into the schemes and as such, if a scheme was found to be fraudulent, they could be held to be part of a conspiracy to cheat the Revenue.”

The charity is aware that sometimes schemes are said by HMRC to be more difficult to shut down because they are based offshore.

'No barriers needed, in terms of extradition'

“Schemes we have seen have been based out of Crown dependencies such as the Isle of Man and Jersey [but] we have [also] heard of some schemes using Cyprus as a jurisdiction”, TaxWatch says.

“There should be therefore no barriers in terms of extradition, or the request of mutual legal assistance if HMRC were to open criminal investigations into promoters using these jurisdictions.”

In August, Mr Turner made the same call to to the Economic Crime Unit of the City of London Police -- that criminal prosecutions should be brought against avoidance scheme peddlers.

“No reply yet,” he said yesterday. “Not entirely surprised not to have got a response, but we will be following it up.”