Construction industry bosses arrested in dawn raids

21 people were arrested today in dawn raids by HM Revenue & Customs (HMRC) officers investigating a multi million pound construction industry fraud.

Eighteen men and three women from the West Midlands, Staffordshire, London and Manchester were arrested on suspicion of conspiracy to cheat the public revenue and money laundering offences amounting to over £6 million. They are currently being questioned by HMRC criminal investigators at police stations across the UK.

The plot is believed to have been orchestrated by organised crime gangs in a bid to steal millions of pounds in a complicated conspiracy through a version of ‘missing trader’ fraud. This sees the creation of a contrived chain of companies, which claim to subcontract labour for the construction industry, with the sole intention of disappearing before paying the taxes due to the public purse. They pocket the money and hijack legitimate companies along the way.

The conspiracy exploits individuals working in the construction industry and abuses the government scheme that regulates the industry’s tax affairs. It is thought thousands of construction site workers may have been robbed of the tax and national insurance contributions they believe they have paid over the last six years.

Adrian Farley, Assistant Director of Criminal Investigation for HMRC, said:

“Today’s arrests are the result of strenuous efforts by our teams of dedicated officers to disrupt the sophisticated scams of organised crime gangs behind money laundering activities. This conspiracy by a number of contractors is believed to have resulted in the theft of over £6 million from the public purse, depriving vital public services of much needed investment. We are committed to bringing them to justice and to deprive them of the proceeds of their crime.”

The arrests were made on suspicion of conspiracy to cheat the public revenue and money laundering offences under the Proceeds of Crime Act 2002. The Act was specifically designed to take the profit out of crime, making it harder for money to be laundered and depriving criminals of their illicit wealth.

Over 40 search warrants were executed at residential and business premises in the West Midlands, Staffordshire, Nottingham, London and Manchester. Further searches are underway.

Cash totalling £73,000 has so far been seized along with paperwork including bank accounts and computers, Class A drugs and associated equipment.

HMRC investigators were supported by West Midlands Police today in this Viper Operation - a new approach to tackling serious organised crime. It involves a very structured and carefully co-ordinated response, taking a broader view and using every resource available to attack the criminal - not just the crime.

West Midlands Police Asst Chief Const Suzette Davenport said:

"Today, officers from the West Midlands Police Region have worked closely with and supported HM Revenue & Customs (HMRC) in this operation. Viper operations involve law enforcement agencies working together to protect communities in a different way which in turn means our opportunities to disrupt and intervene are increased. We are leading the country with this new approach.”

Switzerland agrees to exchange tax data

A Protocol delivering comprehensive exchange of information up to OECD and international tax standards between Switzerland and the UK, which covers UK taxes of all kinds, was signed in London today by The Financial Secretary to the Treasury, the Right Honourable Stephen Timms MP and the Swiss Ambassador to the UK, His Excellency Alexis P Lautenberg.

Stephen Timms said:

“I very much welcome the Swiss Federal Council’s agreement on international co-operation in tax matters and their adoption of the OECD standard on administrative assistance.

“The days when hiding money off-shore represented a viable means of evading UK tax are rapidly drawing to a close.”

Dave Hartnett, HMRC’s Permanent Secretary for Tax, added:

“Transparency and information exchange are the foundation on which fair and effective tax systems are built. I am delighted that there is growing global recognition of the inevitability of properly regulated information exchange as the key to proper tax visibility.”

The text of the agreement can be accessed on the HMRC website by following the link below:

http://www.hmrc.gov.uk/international/switzerland-eoi.pdf

and will in due course be laid as Schedules to a draft Order in Council for consideration by the House of Commons. It will then also be available from the Stationery Office. The Protocol will come into force as soon as each government has completed the necessary procedures to give effect to it under its domestic laws.

Teachers urged to look into Tax Matters

With schools across the country getting ready for the new school year, HM Revenue & Customs (HMRC) is urging teachers to log onto its new, free online resource for teachers – Tax Matters.

Specifically designed for Personal, Social, Health and Economic education (PSHE), Business Studies and Citizenship teachers of pupils aged 11-19, the Tax Matters resource contains three new teaching modules, to help secondary school pupils gain an understanding of how tax is raised, what the main taxes are, and what they ultimately pay for.

The three modules – which cover Income Tax, National Insurance, and Tax and Society –use fun, interactive features such as videos, quizzes and games, as well as key facts and figures, to help teachers bring the subject to life in the classroom.

There are also accompanying, ready-made lesson plans for each module available online, for both Key Stage 3 and Key Stage 4 pupils – all packed with ideas for using Tax Matters with students.

All of the materials are available free by visiting www.taxmatters.hmrc.gov.uk. You can also find them on the Personal Finance Education Group (pfeg) website at www.pfeg.org/teaching_resources/resources/tax_matters.html, where they have been awarded the pfeg quality mark.

HMRC’s Caroline Smith said:

“By the end of the modules, students will be well equipped to understand what tax is all about. They’ll be clear why we pay tax in the first place, and what it means for them on a practical level, such as why it’s important to keep hold of their National Insurance number and how to understand their tax code.

“Tax Matters was developed with the help of teachers, and so reflects what they need on the ground. It’s interactive, fun and free to download, so we’d urge anyone teaching financial education this year to give it a try.”

Gibraltar to share tax information

The United Kingdom signed a Tax Information Exchange Agreement (TIEA) with Gibraltar yesterday, which will help to ensure that those liable to tax in the UK pay the right tax on investments in Gibraltar and on supplies of goods and services into and out of the UK.

The TIEA was signed by the Financial Services Secretary to the Treasury, Lord Myners, and the Chief Minister of Gibraltar, Peter Caruana QC.

Welcoming the signatures, the Financial Secretary to the Treasury, the Rt Hon Stephen Timms MP, said:

“I am very grateful to the Government of Gibraltar for their constructive approach to this agreement and I welcome the fact that Gibraltar has now joined the rapidly growing number of jurisdictions making good on their commitments to apply high standards of transparency and exchange of information in tax matters.

“Today’s agreement is in line with the OECD’s standards of transparency and the implementation of these standards is very much in the interests of all those taxpayers who comply with the spirit and letter of the law.”

The text of the TIEA can be accessed on the internet at: www.hmrc.gov.uk/international/gibraltar-eol.pdf

The text will shortly be laid as a Schedule to a draft Order in Council for consideration by the House of Commons. It will then also be available from the Stationery Office. The Arrangement will come into effect as soon as each government has completed the necessary procedures to give effect to it under its domestic laws.

Warning for offshore tax dodgers in new HMRC podcast Nat 53/09

Anyone with undeclared offshore tax liabilities who fails to come forward under the New Disclosure Opportunity (NDO) faces an increased risk of prosecution, HMRC’s Permanent Secretary for Tax, Dave Hartnett, warns in a new podcast launched today.

Under the NDO, people making a complete and accurate disclosure of their untaxed offshore liabilities between 1 September and 12 March 2010 will have any penalty capped at 10 per cent, or 20 per cent if they failed to take up a written offer of a capped penalty under HMRC’s 2007 Offshore Disclosure Facility (ODF).

In the podcast, Dave Hartnett makes it absolutely clear that penalties will be “much higher than 10 or 20 per cent” for those who don’t come forward, and stresses that “there will not be another chance” to do so.

“This time,” he warns, “we are going to have information from the majority of banks operating in the United Kingdom. So, we’re going to have a much bigger database from which to work.”

The podcast is available to listen to or download for free from the HMRC website at www.hmrc.gov.uk/podcasts.

Corporation Tax Alert for Agents and Businesses

HMRC is writing to half a million companies and tax agents this month, to alert them to important changes to Corporation Tax (CT) filing.

The mail-shot contains a new HMRC leaflet on the changes, which will require all company tax returns delivered after 31 March 2011 to be filed online, for accounting periods ending after 31 March 2010.

The leaflet explains how, after 31 March 2011, CT returns must be filed online in a specified data format (known as Inline XBRL or iXBRL). Companies will be able to file online either through commercially available software or by using HMRC’s own CT filing software, which is aimed at companies with less complex tax affairs.

As the leaflet explains, there is no need for companies to re-engineer their accounting processes to comply with the requirement to file online using iXBRL, as either HMRC’s CT filing software or their commercial software will do this for them.

Mark Holden, Director of HMRC’s Carter Programme, said:

“While March 2011 might seem a long way away, agents and businesses need to be thinking about these changes now, as they will affect accounting periods ending after 31 March next year.

“HMRC is hoping to release its CT filing software towards the end of this year. We’re also working closely with software developers, and a number of commercial products will be available to support the iXBRL standard from November 2009, with more to follow. This will mean the majority of companies who wish to familiarise themselves with filing online before it becomes compulsory will have the opportunity to do so.”

Seven arrests in Carbon Credit Investigation

HM Revenue & Customs (HMRC) officers investigating a £38 million suspected VAT fraud swooped in early morning raids today. The suspected fraud involved the trading of emissions allowances (often called ‘carbon credits’). Seven people were arrested in the Gravesend and Greater London areas and twenty seven properties, both business and residential, were searched. Further arrests are likely and the investigation continues.

Those arrested are believed to be part of an organised crime group operating a network of companies trading large volumes of high-value carbon credits.

The fraudulent companies purchase carbon credits from overseas VAT free sources and then sell them on to businesses in the UK at a VAT inclusive price. The VAT charged by the fraudulent companies is never paid to HMRC.

It is thought that the proceeds of this crime have then been used to finance lavish life styles and the purchase of prestige vehicles.

Les Beaumont, Deputy Director of Criminal Investigation for HM Revenue & Customs (HMRC) said:

“HMRC investigates all criminal attacks on the tax system, halting theft of revenue, gathering evidence and supporting prosecutors in bringing offenders before the courts.

“We always aim to recover the proceeds of crime, restoring that money to the public purse where it belongs. That is our intention in this and all similar cases.

“The Government took decisive action to prevent this type of fraud recurring by zero rating carbon credits for VAT."

Offshore Disclosure Initiative Launch

HM Revenue & Customs (HMRC) has confirmed the details of a new disclosure initiative that will allow people with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities at a favourable penalty rate.

Under the New Disclosure Opportunity (NDO) people who make a complete and accurate disclosure between 1 September 2009 and 12 March 2010 will qualify for a 10% penalty. Those who choose not to take this opportunity and are subsequently found to have undeclared tax liabilities are likely to face a 30% or higher penalty and also run an increased risk of criminal prosecution.

The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said:

“I would urge anyone with offshore accounts holding untaxed income or gains to take advantage of this simple and straightforward scheme.

“Most offshore investors already pay the tax that the law requires and it’s only fair that everyone respects the rules.

“Tax evasion is not a victimless crime. It deprives our public services of vital funding and places an unfair burden on the honest majority of taxpayers.”

Dave Hartnett, HMRC Permanent Secretary for Tax, said:

“I know there are people who regret not taking advantage of our Offshore Disclosure Facility (ODF) in 2007 which focused primarily on the customers of five large banks. Now everybody who has not paid the tax they should in relation to offshore accounts or assets has this New Disclosure Opportunity to pay what they owe with penalties on more favourable terms than normal.

“The procedure is simple and straightforward. Customers will be able to contact us on paper or through a dedicated area of our website.

“This will be the last opportunity of its kind.”

(HMRC) Former England cricketer jailed for drug smuggling

Former England Test cricketer Christopher Lewis was jailed today for 13 years after being convicted of smuggling cocaine into the UK. Accomplice Chad Kirnon, a London basketball player, was jailed for 13 years. Between them, the two men hid over three kilos of cocaine in tins of fruit juice carried in their baggage. The drugs had an estimated street value of £140,000.

Investigators from HM Revenue & Customs (HMRC) interviewed Lewis (41) and Kirnon (27) after UK Border Agency (UKBA) officers detected the drugs on 8 December 2008. The two men had arrived at Gatwick Airport on a flight from St Lucia and following the discovery they were arrested and subsequently charged.

The trial, which was prosecuted by the Revenue & Customs Prosecutions Office (RCPO), commenced at Croydon Crown Court on 11 May 2009.

Peter Avery, Assistant Director, HMRC Criminal Investigations said:
"Sportsmen and women who are regularly in the public eye have a responsibility to act as role models and ambassadors for their respective sports. It is therefore even more disappointing when such role models get involved in the criminality of attempting to smuggle Class A drugs into the UK. HMRC investigators do not differentiate in their determination to bring anyone involved in such activity to justice, whether they are famous or not.

Drugs devastate lives and communities and we are determined to prevent them reaching UK streets.

Anyone with information relating to smuggled goods or other illegal activities should contact HMRC's 24 hour hotline on 080...."

In passing sentence, His Honour Judge Nicholas Ainley said:
"The majority of smugglers usually have the courage or dignity to plead guilty and get credit for that. You have forfeited the right to do that. Kirnon you made it as a basketball player and Lewis you have been at the top of your profession. Your motivation was greed, you decided the risks were worth it and the rewards substantial. This was major organised crime."

(HMRC) HMRC wins minimum wage court battle

Bar and restaurant workers have today been given a helping hand by the Court of Appeal in their fight for fair pay. The court ruled in HM Revenue & Customs' favour by upholding current national minimum wage legislation relating to tips, gratuities and discretionary service charges in the case of Annabel's restaurant and night club and others.

The judgment confirmed that employers must pay their staff at least the national minimum wage regardless of any tips, gratuities, service charges or cover charges, providing they are not paid by the employer to workers through the employer's payroll. This means that Annabel's and others must now pay over £125,000 in arrears to its workers.

HMRC had argued that payment via a 'tronc' (an independent distribution scheme) does not count towards the national minimum wage.

The Court determined that where restaurant or bar service charges are paid by the customer to the employer, but are then paid into a 'troncmaster's' bank account for distribution in accordance with a 'tronc' scheme agreed between the troncmaster and workers, the sums distributed to workers are not "paid by the employer" and so cannot be included in national minimum wage pay.

Rt Hon Stephen Timms, Financial Secretary to the Treasury said:

"The Government's priority is to ensure that all workers are paid at least the national minimum wage. I am extremely pleased that the court has recognised HMRC's commitment to ensuring that tips are correctly and fairly distributed to the people who earn them. This is good news for bar and restaurant workers across the UK."

HMRC vigorously enforces the minimum wage across all employment sectors including the catering and hospitality industry. Anyone who thinks they are not being paid national minimum wage rates should contact the confidential NMW Helpline on 084....

(HMRC) Progress in the fight to tackle tobacco smuggling

The Government has today taken another significant step in the fight against tobacco smuggling as Exchequer Secretary to the Treasury, Angela Eagle today signed anti-smuggling agreements with two international tobacco manufacturers.

The agreements with Philip Morris International (PMI) and Japan Tobacco International (JTI) - complement the legislation that the Government introduced in 2006, requiring all tobacco manufacturers to help prevent smuggling through careful control of their supply chains.

The Exchequer Secretary/Angela Eagle, said: "These agreements are an important new element in the fight against tobacco smuggling. In the last decade we have halved the size of the illicit cigarette market in the UK and by signing these agreements, we are demonstrating that we are determined to continue working with tobacco manufacturers to tackle smuggling."

Since the UK's first Tackling Tobacco Smuggling strategy was published in 2000, HM Revenue & Customs and the UK Border Agency have:

* reduced the proportion of illicit cigarettes from 21% in 2000 to 13%;
* seized more than 14 billion cigarettes and more than 1000 tonnes of hand rolling tobacco in the UK and abroad;
* broken up 370 criminal gangs involved in large-scale smuggling;
* prosecuted more than 2,000 people and issued more than £35m worth of confiscation orders.

(HMRC) Baby bonus for mothers-to-be

Mothers-to-be can now claim a tax-free cash bonus of £190.

The new Health in Pregnancy Grant (HiPG) is a one-off payment intended to help pregnant mothers stay fit and healthy in the run up to the birth, and help meet some of the costs as the big day approaches.

Yvette Cooper, Chief Secretary to the Treasury, said:
"Every month around 65,000 women in the UK celebrate the birth of a new child. And with the introduction of the baby grant mums-to-be can now get extra help at such an important time in their family life.

"Every mum knows that the run up to birth can be an expensive and sometimes stressful time.

"The grant will help mums-to-be support their good health during the pregnancy, as well as help give their child the best possible start in life. It's the mums' choice what they do with the cash as everyone's circumstances are different."

Janet Fyle, Professional Policy Advisor at the Royal College of Midwives, said:

"This is a commendable initiative from the Government, and one that demonstrates that we value and want to support mothers-to-be. Midwives have a crucial role to play in assisting and enabling all women to access the grant. They are often a woman's first, and in some cases, only contact with the health service.

"Midwives will be there to give objective advice and information to women about the grant, because they know an investment in women is an investment towards a healthier woman and a healthier baby."

The money can be claimed from the 25th week of pregnancy, after receiving health advice from a midwife or other health professional. Expectant mums will be given a claim form to sign and send off, which they must do within 31 days. When the claim is approved, the money is paid directly into a bank or building society account.

Pregnant women can get more information at http://www.direct.gov.uk/money4mum2be or by downloading a free podcast at http://www.hmrc.gov.uk/podcasts