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Offshore Trusts: Next On HMRC's Hit List

Those who do not inform HMRC of offshore trusts to which they are party, could face a financial penalty of 200% of the tax due. A criminal prosecution for tax evasion, money laundering or fraud is likely to follow, especially as HMRC has a renewed appetite for such prosecutions.

Traditionally these trusts (many of which set up in the 80s and 90s) were done so in order to protect assets, but HMRC have long suspected that these trusts are essentially devices to facilitate evasion and other criminal activities.

Many people claiming non-domiciled status and holding valuable properties in offshore trusts or companies, ought to take advice and check that they still fall within the recently amended tax rules (see Budget 2013).

Jeffrey Lewis has just been instructed by an individual facing such a criminal investigation; contact him if you have a similar issue.

We have been successfully advising clients with contentious tax issues (both civil and criminal) for many years.

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CML States 20% Increase in First Time Buyers in March 2013!

The Council for Mortgage Lenders reports that there has been a 20% increase in first time buyers since February 2013, but that this figure is 21.7% down from record levels in March 2012, which marked the end of the stamp duty amnesty. Overall, though, the government backed ‘Help to Buy Scheme’ and the ‘Funding for Lending Scheme’ (FLS) is helping to restore confidence in the first time buyer market.

This is a market which is rapidly changing; many first time buyers are older and have been saving for many years. Some are still reliant upon the ‘Bank of Mum and Dad’ for that deposit and most are incredibly cautious about venturing into the property market.

We know how nervous first time buyers can be and we have a specialist lawyer, Layna Thompson, who will gently and confidently take you through the process.

Contact Layna if you are a first time buyer for efficient conveyancing at reasonable rates.

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1716 Hits

Confiscation Update: R v Waya [2012] UKSC 51 & R v Mahmood [2013] EWCA Crim 325 – by Miles Herman

The recent long awaited judgement in R v Waya will patently have far-reaching effects in future post-conviction confiscation proceedings of significance for the profession. The Supreme Court ruled that, in line with the European Convention on Human Rights, criminal courts must not make disproportionate confiscation orders.

There can be little doubt that defence practitioners will need to make frequent references to the judgement in Waya to assist in tactical approaches to confiscation proceedings from now on.

The facts of Waya are well known to many and are not repeated here. The significance of the judgement is that the Supreme Court looked at the existing legislation in light of European law and concluded that confiscation orders under POCA must be proportionate with the aims of the legislation and further POCA legislation must be compliant with European law.

How will this be played out in future cases? Well the Court stated that the usual safeguard to protect a defendant against a 'disproportionate' order would normally be the common sense approach of either the Crown not to seek one or the Court not to make one.

We as defence practitioners are quite aware there have been many orders made against defendants that have been disproportionate and, indeed, ludicrously high, resulting in prisoners serving time in default. This judgement, I believe, will lead to a greater sense of fairness when the Court considers the issue of confiscation orders post-conviction.

Furthermore, this case opens the gateway for defence practitioners to argue matters that have not previously been questioned in the courts.

There may be circumstances, even where a defendant has obtained property as a benefit from criminal conduct, when it may be argued that it would be disproportionate to make an order in the sum that would otherwise be recoverable.

So the word 'proportionate' is the new buzzword and one that will be before the courts in cases that warrant arguments to be advanced in the future.

What is for certain is that there will be cases coming before the Court of Appeal where judges will reconsider exactly what proportionality means. For now in confiscation cases where these issues may be important, the judgement should be looked at and argued by the defence practitioners in support of their client's case.

One of the first cases where the principles laid down in Waya have been referred to was in R v Mahmood. In this case, the Appellant had conspired with others to import large quantities of heroin from Afghanistan. He was sentenced on the basis that he played a vital role in the conspiracy, and the prosecution argued in confiscation proceedings that the Appellant should be treated as having joint liability and those assumptions under the criminal lifestyle provisions should be applied.

The Court found that the Appellant lacked credibility and must have hidden assets. It was ruled his benefit consisted of the value of the heroin seized; expenditure incurred during the length of the conspiracy and due consideration was given to the criminal lifestyle led by the Appellant.

The Court held the recoverable amount to be the same as the benefit as the Appellant had been unable to show that the value of his assets was less than the benefit figure.

The appeal was lodged on the basis the judge was wrong in the valuation of the benefit for heroin seized and also the expenses incurred by the co-conspirators.

In respect of the valuation of the heroin, Mahmood contended that he had not had ownership of the full value of the heroin seized and that as he did not have the leading role, therefore the confiscation order was disproportionate under the principles discussed in Waya.

The Court held on this point that with a conspiracy each member of it can be regarded as having jointly obtained the whole benefit and that each member can be required to pay its full value as had been confirmed in Waya. To this extent the appeal was unsuccessful.

As to the issue of expenditure, the Court stated the judge was wrong as joint liability and a conspiracy does not assist in identifying which member incurred what expenditure in the course of an operation.

Consequently the Court stated that the assumptions does not mean that each conspirator is treated as having incurred all of the expenditure, inferences may be drawn and in many cases it will be found that co-conspirators contribute equally to such expenses. In this case, however, there was no finding about the Appellant's expenditure and it was therefore wrong it was held to attribute the expenses to the Appellant.

In light of this judgement all criminal defence practitioners will need to consider when advising their clients not only as to the valuation of the benefit of in this case the drugs but also the expenses incurred during the conspiracy.

In Mahmood the argument as to disproportionality failed; this will be one of many cases where confiscation orders not previously contested in the Crown Court will now be contested on this point and there will be more appeals to the Court of Appeal.

As a consequence of Waya, the extent of the investigation and legal work involved in many confiscation cases can only increase.

All defendants are entitled to have all of these issues considered carefully and in detail and at Lewis Nedas Law we are well placed to do that.

We have successfully contested cases in the Crown Court and most recently in the cases of R v P Charlery. Through diligent defence work undertaken by Miles Herman and Jeremy Ornstin, the Court has been invited to make a nominal order against a defendant who was initially treated as equally benefitting from other co-conspirators in a million pound conspiracy.

For further advice and guidance please contact Miles Herman.

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City of London Fraud Arrest 7 on Pension Liberation Fraud Allegations – by Siobhain Egan

After a joint high profile campaign (including agencies such as HMRC, the Pensions Regulator, the FCA, the SFO and SOCA) seven people were arrested yesterday by City of London fraud police.

Essentially, the authorities are of the view that alleged pension liberation frauds are another manifestation of the 'boiler room fraud', and claim that since 2008 over £400 million has been defrauded.

Pension liberation schemes are not illegal per se; essentially it is the transfer of a pension scheme member's savings to an arrangement that will allow access to the funds before the age of 55 years.

The authorities are of the view that because of the dire economic climate in this country, pension scheme members are tempted to release funds, e.g. to help their offspring with deposits for homes etc.

Allegations of fraud arise when members are misled about the consequences of such a transfer, e.g. not told about fees, tax liabilities, or how the remainder of the pension funds are invested.

Often loans are raised against the pension schemes or the monies are moved to an unregulated scheme (i.e. not registered to HMRC and the Pension Regulator), often to an offshore vehicle. The liberation company often charges a fee of between 20% and 30% and HMRC will tax any sums released.

The other aspect to pension liberation is that the taxes that HMRC will apply to the released funds are anything between 55% and 70%.

Contact Jeffrey Lewis if you have any problems concerning this issue.

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1988 Hits

The Length of my Lease is Diminishing and so is the Value of my Flat: What Should I Do?

You are not alone; there are at least 1.5 million leaseholders in the UK who are in the same position as yourself and they represent 10% of all residential owner-occupiers. This could spell real trouble, because for most of these individuals their property is their major asset.

The value of your property can fall by as much as 5% as the lease approaches 80 years or less, and drops even more if the lease is in the region of 60 years. This in turn means that it could be difficult to secure a mortgage and make the property difficult to sell. Certainly, in our experience, most lenders will not re-mortgage if the lease is less than 70 years.

You can extend the lease or buy the freehold of the property.

A standard lease extension for a flat is 90 years (see the Leasehold Reform, Housing and Urban Development Act 1993) which is added to the remaining term on the lease. This is actually a fairly straightforward process, it only becomes expensive if the lease is less than 80 years and the respective parties’ valuers have to take into account the ‘marriage value’ of the lease.

The ‘marriage value’ means the potential for increase in the value of the flat arising from the grant of the new lease. The ‘profit’ will be shared 50:50 between the landlord and the leaseholders.

Non legal costs for this rise dramatically if the term is less than 80 years. The parties’ respective valuers will rely on local knowledge and experience to assess the value of the flat as a result of the new lease.

If you hold a leasehold flat in a block or conversion, very common experiences in Central and North London, why not see if your neighbours will renew their leases at the same time (or try and acquire the freehold)? This would give you real, collective bargaining power.

Our property lawyers are here to help. They are highly skilled, talented, experienced, fully qualified solicitors who have worked in the London leasehold market for many years. They understand how stressful this whole process can be and will do everything to relieve as much of the worry from you as they can. They are cost efficient and offer attractive price plans to keep the costs of this important process down.

Contact Richard McConnell, Janak Bakrania, or Layna Thompson.

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2043 Hits

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