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A Buoyant Year End for HMRC

HMRC logoHMRC had a buoyant year end in March 2016, as a result of the Stamp Duty increase deadline; a record high in stamp duty receipts was recorded.

A YouGov survey concluded that the majority of public opinion gave overwhelming support to the increase in stamp duty, because they believed that the benefit will be passed to First Time buyers. The outcome remains to be seen.

Things became more difficult for HMRC when in an embarrassing (for them) judgement handed down by the Court of Appeal, it was pointed out to HMRC that they had pursued the wrong party when seeking the payment of £50 million stamp duty due as a result of the sale of the Chelsea Barracks in 2007. It seems that the true owner of the property is the Qatar based bank Masraf al Rayan, though the purchaser was an investment company ultimately owned by the Qatar Investment -Authority. HMRC will appeal, apparently, but we can't help thinking that there wouldn't be many UK based purchasers that could get away without paying Stamp Duty!

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Property Market Awaits the June Brexit Referendum

brexit 1After having successfully survived the frenzied madness of March 2016, during which our property lawyers were overseeing up to 16 completions a day because of a rush to beat the March 31st Stamp Duty Land Tax increase deadline, the property market is now quieter.

Most potential buyers and sellers anxiously await the outcome of the Brexit referendum on June 23rd 2016. Other factors suggest that perhaps we have reached the top of the 12 year increase in property prices and the market, especially in London and the South East, is heading for a correction.

Statistics published in April 2016 show that mortgage lending for the month fell by under 1/3; residential transactions in the country fell below 100,000 as did Stamp Duty receipts, as one would expect.

The National Association of Estate Agents in April saw a marked reduction of new buyers (the lowest since March 2014) together with a sharp drop of properties coming to market .

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Panama Papers: Prosecutions and Practicalities FAQ’s

The Panama Papers have caused a great deal of reputational damage for many individuals linked to offshore accounts and financial centres, but will there be any practical repercussions for those involved?

With 11 million documents leaked detailing a network of offshore companies set up in tax havens, the Panama Papers leak is unprecedented. However, the papers may not necessarily lead to prosecutions or investigation by HMRC. In this post we look at some of the main concerns of those who may hold offshore accounts and provide answers and solutions to some of the most important issues facing those affected by the Panama Papers leak.

Is tax avoidance illegal?

Holding an offshore trust or bank account or trust is not an offence under UK law. Genuine tax-planning activities are perfectly legal even where offshore structures are used.

However, holding an offshore account with the sole purpose of avoiding UK tax liabilities is deemed to be tax evasion, which attracts harsh penalties. Furthermore, holding offshore or overseas account does not necessarily equate to tax evasion, it is possible to meet your UK tax obligations whilst holding these kinds of financial constructs.

In recent years, there have been a number of “settlement windows” which encourage UK taxpayer to disclose offshore assets and become compliant with the law without facing criminal charges. It is possible that many of those named in the Pananma Papers have settled their debts with HMRC as a result of these arrangements.

What has become more of an issue in recent years is tax avoidance, and public backlash at circumstances where the law is used for purposes that it was not intended to be used for, enabling tax avoidance. Those seeking to use legitimate tax avoidance measures must understand that the reputational damage that could be caused is also worth taking into account.

Is tax avoidance ever acceptable?

This is a difficult question to answer, as what kind of tax planning behaviour or scheme HMRC will challenge is a subjective issue, with different inspectors taking different approaches. The policy and pursuit of cases in this area are continually developing which means that whilst a tax adviser may advise you that HMRC will not question your tax planning, this may not be the case a couple of years later.

How much of my tax information can become public knowledge?

Most of those detailed on the Panama list are unlikely to be splashed across national newspapers, but you may be concerned about how much of your information could be circulated in the public domain. Whilst HMRC may not specifically investigate your case, the potential for reputational damage and being labelled a ‘tax avoider’ may be of concern to you. There is no ‘right to privacy’ in UK law and as a result, if your details end up in the public domain, there is no civil remedy for breaching this right. However, Article 8 of the European Convention on Human Rights (ECHR) provides the right to respect for a private life, and as a result, there is an implied protection from misuse of private information. However, individuals of high authority are expected to adhere to a higher level of transparency, especially when their private affairs may be of relevance to the public interest. For example, the public interest in MP’s expenses. Allegations of tax avoidance may cause the public to lose confidence in certain individuals and as a result, private financial information may become relevant to the public interest and can be disclosed. 

 Will HMRC obtain the Panama Papers?

HMRC have not yet received the Panama Papers, but it is highly likely it holds a detailed database of offshore account information. Much of this information has been voluntarily provided by taxpayers.

The Connect computer system, used by HMRC has the capacity to identify taxpayers and advisers that may be worth investigation or looking at more closely. HMRC in light for the Panama Papers is like to be looking at the data it currently holds in order to be more pro-active in tackling tax evasion.

What information could be obtained by HMRC?

The information disclosed by the Panama Papers includes information about the number of entities involved in offshore activities, and thus it can be assumed that client lists including the names of beneficiaries the holders of shares may be disclosed. The ICIJ has been working on this investigation on a geographical basis, so it is likely that HMRC will receive the relevant data it requires in a searchable format, along with supporting documentation. The data provided may date back as far as the 1970’s.

In addition, further data may come to the forefront as the investigation continues. For example, if another tax authority such as the US Internal Revenue Service (IRS) begins a criminal investigation, it is likely the papers involved in the investigation will be distributed to other jurisdictions. Interestingly as the firm involved in the Panama Papers leave claim to have done nothing wrong, they may wish to voluntarily disclose more information and documentation, including details of financial intermediaries.

If you are concerned about a tax investigation, contact us today to discuss your options. There may be both civil and criminal consequences for not complying with HMRC investigations, and it is important that your discuss such investigations with a specialist tax investigations lawyer.

What will HMRC do with the data?

Working out exactly how HMRC will use the data it receives is something that is of most concern to our clients. The government announced a multi-agency task force including HMRC staff, the Financial Conduct Authority (FCA), the Serious Fraud Office (SFO) and the National Crime Agency (NCA). Using all of these agencies makes it clear that the powers of the task force will be extensive and the investigations will seek to uncover not only tax evasion but also other financial crimes such as bribery, money laundering and fraud. The investigations may also allow the FCA to check up on the conduct of the service providers the agency regulates.

However, how exactly HMRC will use the data provided will greatly depend on the clients compliance history. What is important for those involved in the Panama papers leak to consider is not their intentions when setting up their offshore structure, but what HMRC may think their intentions were given the information that HMRC may now hold.

Your tax adviser should be aware of exactly what information HMRC will hold on your offshore structure, and this is an advantage. This allows your legal representatives and tax adviser to get an accurate picture of what HMRC may be concerned with in terms of your

One small advantage of information used by HMRC being in the public domain is that the advisers know what the authorities have. The client should understand that there are many other potential sources of information and should not proceed on the basis that only the Panama data needs to be disclosed.

Remember, it is not just about tax. The involvement of high-profile people will generate longer-term interest than the corporate scandals. HMRC will be forced to take action and we should expect it to be based on profile or potential yield levels. It would be unsurprising if the Panama list was to form the basis of another COP9 project where letters are issued to everyone on the list ‘en masse’.

How can I protect my reputation following the Panama Papers leak?

Legitimate reasons for using offshore structures are often misunderstood or ignored by the general public and the media. Often, those who use offshore structures as part of legitimate tax planning are tarred with the same brush as those using such structures for illegitimate purposes.

This circumstance is not helped when scandals such as the Panama Papers leak are associated with bribery, corruption, organized crime and money laundering. In short, being associated with offshore tax planning under these circumstances can be very damaging to reputation.

Even where you may feel that your affairs are of no interest to the media, you may need to limit media exposure and even step down from certain charity or education posts you hold temporarily. This will limit the scrutiny you may face from the media and avoid any accusations of ‘hypocrisy’.

If you have made previous statements of wealth and omitted offshore assets, such as part of divorce proceedings, or in the course of business, you should be aware that these proceedings may resurface. Any written off debts may be investigated and can even be reopened under certain circumstances. If this occurs, those involved in deliberately failing to disclose corporate assets may face criminal sanctions and the debts may be reinstated.

Can I make a claim against my tax adviser?

If a secret structure advised and implemented by your tax adviser is challenged by HMRC and thus found to be ineffective tax planning, you may be able to make a legal challenge against your tax adviser. You may also consider ‘whistleblowing’ if you have reason to believe that your adviser or their firm is facilitating tax evasion as you could become an inadvertent accomplice in tax evasion. There are strict time limits for making such a claim and you should contact us as soon as possible if you wish to do so.

What should I do if I have had a previous COP9 enquiry and failed to disclose offshore interests?

If you have previously faced a COP9 enquiry and failed to disclose a Panama interest, it is likely that you will face either a civil or criminal fraud investigation. In 2012, Michael Shanly was successfully prosecuted for failing to disclose a Swiss bank account, and this has set a precedent for criminal action against those who fail to disclose such interests in a COP9.

Those who choose to use voluntary disclosure facilities such as the Liechtenstein disclosure facility (LDF), but failed to disclose all offshore assets may be subject to fast-track prosecution. However, all of those who have failed to make such disclosures may face quick and easy ‘document based’ prosecution under the Fraud Act 2006. So long as the Panama documents are provided in an evidentially sound manner and are admissible as evidence in the UK courts, there is a high chance of such prosecution. As a result, if you are facing these circumstances it is vital that you contact our specialist team right away. Lewis Nedas can provide you with specialist advice and have invaluable experience in handling such investigations and prosecutions.

I have previously failed to disclose offshore interests, how will I be affected?

If you have previously had an inquiry into your tax return, or the return of a company or trust and you have failed to disclose offshore assets it is possible to make a pre-emptive disclosure to HMRC. Your position will, however, depend on whether the enquiry into your affairs was concluded with a signed statement of assets and liabilities and a certificate of full disclosure.

If you are under enquiry at present, you should use this opportunity to regularise your position – this will, however, depend on the stage of the enquiry and what information and statements you have given to date.

Without a doubt, the Panama Pares will continue to generate great interest from the public, the media, and government agencies. With facilitating and enabling offences coming into force from 2017, it is vital that is you have been involved in an offshore investigation or believe you may be at risk, that you seek specialist legal advice as soon as possible.

Contact our Tax Prosecution Defence Solicitors in Central London

With offices in Camden and Fleet Street, we represent and advise businesses in Central London, West London, North London and across the UK.

For further information or to speak to our solicitors please telephone us on 020 3131 5326, complete our online enquiry form or contact Jeffrey Lewis, Jeremy Ornstin or Siobhain Egan.


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Lewis Nedas Law Commercial Department Goes Live!

shaking hands 1Welcome to the Lewis Nedas Law Commercial and Litigation Department Blog. Our goal is to keep you informed about recent legislative changes that may affect you or your business by giving you free, regular, cutting edge updates on this web page. We will also be posting about our recent successes, professional legal opinion, developing case law and other newsworthy items on a frequent basis. We feel that a Blog is a great opportunity to invite our readers and our existing clients to pose us with topics for discussion so that the Blog is as interactive as possible. Please note that for confidentiality reasons we will not be able to give any specific legal advice to you or someone you know on this public forum, but if you do have such a query please do not hesitate to get in touch with one of our commercial lawyers who will be happy to help you.

Our first topic is one that has been raised in several recent company transactions that we have been working on and so we felt we could shed some light on this complex area or encourage you to contact us for further advice.

Company Law Update – People with Significant Control

If you’re a business owner or a company director, you’ve probably heard about the new administrative changes affecting UK companies, SEs and LLPs from 6 April 2016. The most significant of these is almost certainly the requirement to keep a “Register of People with Significant Control” (and not forgetting the obligation to file a “Confirmation Statement” once a year, which replaces the obligation to file an “Annual Return” as of next month). If you do have the unenviable task of dealing with such matters yourself, you will no doubt have noticed that there is ample (and by that I mean no less than seven handbooks and hundreds of pages!) guidance on the government’s website to steer you through this complicated area of company law, and a quick Google search of the letters “PSC” reveals a multitude of websites, from laypeople to lawyers, offering fairly comprehensive advice. As such, it is not the purpose of this blog to recite this guidance chapter and verse, or to condense it into a handy how-to guide when so much information is readily available.

No, the purpose of this blog is to inform our readers that, as is the case ninety-nine per cent of the time when a new law is implemented, some confusion and some moderate debate is taking place in commercial circles as to how the rules should be interpreted. For instance, the government has published new guidance as recently as 13 May 2016 (see to help business owners through this legal minefield and we have also been reading other blog posts from law firms on websites such as Lexology which are potentially very confusing to a lay person. Given that the sanctions for non-compliance will be of a criminal nature (as are the sanctions for failure to keep most company information up to date), we understand (and indeed we have experienced) that many people will see this as an administrative headache that distracts them from focussing on their aspirations of running a successful business. The types of queries we hear regularly are:

  •  What is a PSC Register?
  •  How do I identify a person with significant control?
  •  How and to what extent should I contact these people?
  •  What information must I enter on to the Register?
  •  How and when do I need to enter information on to the central public register at Companies House?
  •  How often must I review the information contained on the Register?
  •  Where must the Register be kept and for how long?
  •  What restrictions can be imposed on people who refuse to respond to requests for PSC information?
  •  Where can I find further guidance on this subject and are there any updates available?

As you can see, this is an extensive list of questions that we have already had from our existing clients and we are sure there will be more on this topic until such time as the new legislation has had time to bed in.

If you are at all concerned about the new legislation and whether it affects your business, or if you would like to speak to our team about your corporate and commercial needs generally, please contact us by emailing our enquiries line and we guarantee someone will come back to you within 24 hours.

Adam Creasey

Lewis Nedas Law

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Siobhain Egan Nominated by Clients for the Law Society's Excellence Award 2016 - Solicitor in Private Practice

We are  delighted to announce that Siobhain Egan has been nominated, by clients,  for the Law Society's Excellence Award 2016 - Solicitor in Private Practice.

Read more about Siobhain here.


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and Awards

legal 500 uk leading firm 2017 chambers leading firm 2017