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Lewis Nedas Law welcome criminal defence specialist Ayeh Nowroozi

lewis nedas new staff femaleLewis Nedas are delighted to announce that criminal defence specialist, Ayeh Nowroozi, has joined the firm as a consultant solicitor. 

Ayeh has a long standing following within the Iranian community amongst a number of communities, and specialises in the defence of high profile complex crime.

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Unexplained Wealth Orders: A new tool for seizing proceeds of crime

The Criminal Finances Bill, aimed at improving the ability to tackle money laundering, corruption, tax evasion and terrorist financing in the UK, is currently making its way through Parliament. It contains new, potentially draconian, investigatory powers that enable law enforcement agencies, both regulatory and prosecuting, to require an individual to explain the origin of their wealth. These Unexplained Wealth Orders (UWOs) have been introduced to close loopholes that are being exploited to hide the proceeds of crime.

In this blog, we provide a brief overview of UWOs and raise some concerns over their use once they become available to the authorities. If you require more information, please contact us. Our specialist asset restraint and confiscation team have vast experience successfully acting for a variety of businesses and individuals in both civil recovery and criminal proceedings.

What are Unexplained Wealth Orders?

Unexplained Wealth Orders (UWOs) are a civil investigatory tool intended to be used by enforcement agencies investigating serious criminality (the National Crime Agency, HM Revenue and Customs, the Financial Conduct Authority, the Serious Fraud Office and the Crown). They require an individual or company to set out the nature and extent of their interests in property and explain how it was obtained. An order may also require them to provide information or produce documents.

An enforcement agency must make an application to the High Court for a UWO. For an order to be made, the High Court must be satisfied that the respondent holds the property and the property value is greater than £100,000. It must also be satisfied that there are reasonable grounds for suspecting that the respondent’s lawfully obtained income was insufficient for them to obtain the property. Only certain people can be the subject of a UWO: the respondent must either be a politically exposed person, or someone who is, has been, or is connected to a person who is or has been, involved in serious crime, whether in the UK or beyond.

If an UWO is made, the court may also make an interim freezing order prohibiting the property from being dealt with in any way, provided it considers it necessary to avoid the risk of any recovery order being frustrated. If an UWO is made without notice, a freezing order can also be made without notice.

A failure to respond to an UWO will allow assets to be made subject to civil recovery action under the Proceeds of Crime Act 2002. Further, a person can be found guilty of an offence if they provide false or misleading information in response to an UWO. Penalties include imprisonment for a maximum of two years or a fine on conviction on indictment, or imprisonment for a maximum of 12 months or a fine on summary conviction.

How will Unexplained Wealth Orders be used?

The current framework requires a legal conviction in the country of origin before highly suspicious wealth can be acted on and corrupt property seized. This requirement is currently being exploited by overseas individuals and businesses where their home country is in a state of crisis or they hold power. UWOs are therefore being introduced to stop the UK being used as a safe haven for money laundering by overseas criminals.

Although UWOs will be subject to safeguards, such as only applying to specific circumstances, requiring an application to be made to the High Court and their use being guided by a statutory code of practice, there are concerns that these new measures have the potential to be abused by the authorities. Under their current form, which is currently being debated in the House of Lords, the respondent does not have to be a UK resident or even live in the UK. Further, they can be retrospective and therefore apply to property that was obtained before the Act comes into force.

It’s also vital for the authorities to not become too overly reliant on UWOs and use them disproportionately, such as in cases where criminal activity is unproven, or against the family, friends or business associates of suspected criminals. Unfortunately, there is a precedent for this, as the authorities have, in some cases, over-stretched their powers in the pursuit of civil asset recovery under the Proceeds of Crime Act.

When your assets are threatened by enforcement agencies, it’s vital to act quickly and seek specialist legal advice as soon as possible. The powers they have at their disposal are very draconian and widely drawn. They do not require a prosecution or conviction and the onus is upon the respondent to prove upon the balance of probabilities that the assets are not the proceeds of crime.

Lewis Nedas Law – Specialist Business & Financial Crime Defence Solicitors London

Our expert Serious Fraud team has over 30 years’ experience successfully defending clients against fraud and financial crime allegations. We are also ranked in Chambers and the Legal 500 for the high quality of our fraud work, and our expert solicitors are described as 'precise', 'steely determined' and 'always mindful of securing the best outcome'. Our specialist financial crime & fraud solicitors, based in the heart of London, therefore have extensive experience of preparing successful defences to fraud prosecutions, including corporate fraud, whether these are brought by the Crown or a statutory body such as the FCA or the Department of Business innovation and Skills. For more information, please contact Jeffrey Lewis or Siobhain Egan on 02073872032 or contact us online.

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Further Reform of Corporate Crime?

Rebuilding trust and confidence in business and markets has put tackling corporate criminality high on the Government’s agenda. To this end, it’s considering whether to reform economic crime, including corporate fraud, money laundering and false accounting, to make it easier to prosecute companies for criminal activity. 

In this blog, we take a brief look at the Ministry of Justice’s proposals for extending corporate criminal liability beyond bribery and tax evasion in its call for evidence, Corporate Liability for Economic Crime, which closed on the 24th March. These proposals go beyond the corporate compliance requirements contained in the Bribery Act 2010 and Criminal Finances Bill, representing what could be a major shift in the law with potentially major consequences for companies and the wider corporate landscape. If you require more information, please contact us. Our specialist corporate crime team can help you resolve any corporate compliance or criminal issues your business may have. 

Proposals to extend corporate criminal liability

The issue of corporate criminal liability comes to the fore every so often. Most recently, it’s been highlighted by recent court approval of a Deferred Prosecution Agreements (DFAs) between the Serious Fraud Office (SFO) and ‘XYZ Ltd’ under the Bribery Act 2010 concerning bribery in order to obtain contracts overseas. Yet, while DFAs represent a useful tool in combating corporate criminality, they also draw attention the difficulty prosecutors face when seeking to hold large modern multi-national businesses to account for criminal wrongdoing committed by their employees, agents or representatives in areas of economic crime other than bribery and tax evasion. 

Prosecutions for corporate wrongdoing are usually sought under common law rules known as the identification doctrine. Under this principle, a corporation is only criminally liable if prosecutors can prove that individuals who can be regarded as ‘the directing mind’ of the company knew about, actively condoned or played a part in the offending. This is a very hard thing to do, and there have been many cases in which evidence of wrongdoing was insufficient to sustain a criminal prosecution. The Government has therefore sought views on a number of proposals aimed at improving effective criminal enforcement against companies in a way that will complement the regulatory regime.

Amend the identification doctrine 

As the common law rules are considered to be a principal hurdle faced by prosecutors, the Government has sought views on whether legislating to amend the identification would be possible and desirable. For instance, legislation could amend the doctrine by broadening the scope of those regarded as a directing mind of a company. In putting forward this proposal, the Government emphasised that: ‘retaining the identification doctrine in any form would perpetuate the notion that a company can commit a criminal offence. It would encourage corporate efforts to limit potential liability through the adoption of evasive internal structures. It would not promote the prevention of economic crime as a component of corporate good governance’.

Create a strict vicarious liability offence 

Vicarious liability, where a company is automatically responsible of the actions of its employees, representatives or agents, without the need to prove any fault, is well established in UK civil law. A form of vicarious liability also governs corporate criminal liability in the US. The Government asked whether such an offence should be subject to a due diligence type defence, so as to be an effective way of incentivising economic crime prevention.

Create a strict direct liability offence 

Unlike vicarious liability, direct liability focuses on the responsibility of a company to make sure that offences are not committed in its name or on its behalf. It’s a separate offence akin to a breach of statutory duty, and when coupled with a due diligence type defence mirrors the corporate offences contained in the Bribery Act. The Government proposed that such a model, based on a failure to exercise supervision, could more accurately target the real nature of corporate culpability. It also sought views on whether such an offence should include the concept of a failure to prevent, which places a burden on the prosecution to prove that the company had not taken adequate steps to prevent unlawful conduct occurring.

Greater regulatory reform on a sector by sector basis

Finally, the Government noted that ‘strengthening deterrents to misconduct through regulatory reform in sectors where it is less developed must always be regarded as a possible alternative to the extension of the criminal law’, citing the reform of the financial services sector as a way of improving conduct through an increased focus on personal accountability for wrongdoing. It therefore sought views on the co-existence of regulatory and criminal law enforcement as a means of holding companies to account. 

The Government is currently reviewing the information it has received following its call for evidence on these proposals. If it determines that a new form of corporate liability for economic crime is needed, a full consultation will be launched on detailed proposals and draft legislation. As ever, our specialist corporate crime lawyers are closely watching developments and keeping clients informed of relevant changes. 

Lewis Nedas Law – Specialist Business & Financial Crime Defence Solicitors London

Our expert corporate crime defence team has over 30 years’ experience successfully defending clients against fraud and financial crime allegations. We are also ranked in Chambers and the Legal 500 for the high quality of our fraud work, and our expert solicitors are described as 'precise', 'steely determined' and 'always mindful of securing the best outcome'. Our specialist financial crime & fraud solicitors, based in the heart of London, therefore have extensive experience of preparing successful defences to corporate crime prosecutions, including corporate fraud, whether these are brought by the Crown or a statutory body such as the SFO, FCA or the Department of Business innovation and Skills. For more information, please contact Jeffrey Lewis or Siobhain Egan on 02073872032 or contact us online.

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HMRC Strikes at Construction Sector VAT Fraud

In its war on tax evasion and fraud, HM Revenue & Customs (HMRC) tends to focus investigations on specific trades or businesses, such as doctors, dentists or plumbers. More recently, it’s turned its attention to the construction sector, specifically businesses that supply labour. On-going investigations have highlighted a growing problem of supply chain fraud – businesses are being set up with the intention of fraudulently failing to pay VAT and making incorrect income tax deductions.

 In this blog, we provide a brief overview of the arrangements HMRC is seeking to address and the options its proposing to target and prevent them. VAT & Tax investigations are lengthy and stressful. It is also important to remember that any information uncovered by the Revenue will be passed to other investigating authorities and could lead to criminal prosecution. It is therefore imperative that anyone who finds themselves coming under the scrutiny of a revenue investigation consult specialist tax investigation accountants and solicitors as soon as possible. Please contact us for more information.

Tax Evasion in the Construction Industry

In its consultation, Fraud on provision of labour in construction sector: consultation on VAT and other policy options, HMRC identifies two principal ways that the supply of labour can result in fraud. The first involves a legitimate business with gross payment status (GPS) under the Construction Industry Scheme (CIS) being taken over. The second involves ‘a new ‘off the shelf’ company fronted by a ‘puppet’ director with a clean compliance record’, that passes the test for GPS and registers for VAT. 

Both arrangements follow a similar pattern of artificially lengthening supply chains in order to evade direct taxes by misdeclaring or not declaring CIS remissions and VAT liabilities. The aim is to delay the time it takes HMRC to identify mismatches between the main contractor’s CIS declarations with those of all the sub-contractors below it by making checks more difficult. By the time these mismatches are identified, the misdeclaring business may have folded or gone missing, while the workforce is usually moved to another business to carry on the fraud. The effect is that these businesses, and their workforce, are deliberately not paying VAT and income tax. There are also failures to make National Insurance Contributions (NICs) that create further risk of benefits fraud and illegal working. 

As HMRC notes in its consultation, ‘overall, the losses from this type of fraud are significant’. Such cases are estimated to cost the Revenue tens of millions of pounds. Although it has sought to tackle the issue by increasing its compliance response and making businesses at the top of supply chains aware of the fraud, the number of contractors often involved makes effective real time checks onerous.   

VAT & CIS Options for Tackling Supply Chain Fraud

‘HMRC is improving its compliance responses by breaking up fraudulent supply chains through civil and criminal interventions. Although effective and reducing fraud, such interventions are responses to the fraud and do not prevent it.’ 

HMRC is therefore exploring its options for stamping out missing trader supply chain fraud in the construction industry by looking to other sectors that have suffered VAT losses, such as the telecoms and energy sectors. The introduction of domestic reverse charges has proved effective at removing VAT fraud in these and other sectors. However, there are concerns that the scale of the construction industry, estimated to amount to around 250,000 VAT registered businesses and encompassing a wide variety of customers, could have a disproportionate effect on honest, small traders as well as private developers, public authorities and voluntary organisations. The consultation therefore seeks views on how best to remove additional risks and complications for both providers and customers from any VAT changes. 

HMRC is also looking at tightening the rules around GPS status and VAT registration to prevent misuse and abuse of CIS. Again, it is keen to avoid smaller sole traders or partnerships from suffering disproportionately and therefore looking to take a targeted approach. It asks, amongst other things, whether changes should be restricted to companies, or if changes should be made to the turnover test to make it more difficult for fraudsters to establish that they are a legitimate business with a trading history. It also asks if contractors or customers should be required to inform HMRC when they become aware of a change to shareholding or ownership of labour provider business. 

Our approach to Tax & Vat Investigations

Tax and VAT is a fast moving area of law that is growing increasingly important for individuals and businesses. You need proactive advice and representation, and our negotiation skills, acquired during our long history of dealing with HMRC and defending prosecutions brought by them and other agencies, give us that vital edge over our competitors. We take action to protect your interests, working with leading tax counsel and specialist tax accountants in order to give multidisciplinary advice.

Lewis Nedas Law – Specialist Tax & VAT Investigation Defence Solicitors London

Our expert Tax Investigations team has over 30 years’ experience successfully defending clients against tax fraud and financial crime allegations. We are also ranked in Chambers and the Legal 500 for the high quality of our work, and our expert solicitors are described as 'precise', 'steely determined' and 'always mindful of securing the best outcome'. Our specialist solicitors, based in the heart of London, therefore have extensive experience of preparing successful defences to tax and VAT investigations and prosecutions, whether these concern HMRC, the Crown or the SFO. For more information, please contact Jeffrey Lewis or Siobhain Egan on 02073872032 or contact us online.

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Laura Saunsbury profiled in the leading CPSA shooting magazine, Pull!

cpsaLaura Saunsbury, who heads our specialist firearms law department, has been profiled in the April 2017 edition of Pull!, the magazine for members of the Clay Pigeon Shooting Association, which is distributed each month to its 24,000 members. In the article Laura talks about her work as the Honorary Solicitor to the CPSA and what led her to specialise in firearms law. To read the article in full, click here.

   

 

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