HMRC use the Bribery Act and other legislation to catch unpaid tax on illegal payments

Gary Brothers is an ex-HMRC Inspector and is now a National Director at Mazars responsible for helping clients deal with tax investigations. He explained to me, at a meeting organised by Jordans, that HMRC have extensive powers to investigate illegal payments and that they are now using the new Bribery Act and other legislation to catch the people and organisations making these payments. Until the Bribery Act, many organisations did not recognise that some payments made by their business might in fact be illegal.

Many organisations that are aware of the scope of the Bribery Act are making voluntary disclosures to HMRC about what they now recognise to be illegal payments under this legislation.  In other instances HMRC are making discrete enquiries about costs that appear in the accounts in respect of payments. He gave the example of an organisation in the UK that had, via an agent in another part of the world, made illegal payments to enable the smooth passage of goods out of the supplier’s country. These illegal payments had been going on for a considerable period of time and HMRC identified a significant amount of unpaid tax which, coupled with penalty and interest charges, led to the organisation having to pay over to HMRC a very large amount in settlement.

Gary gave other examples of circumstances where illegal payments were being made to induce customers to buy from the supplier. These payments were being instigated by aggressive selling techniques and would typically not benefit the customer’s organisation but benefit the organisation’s buyers directly.  In such circumstances HMRC followed the money catching other suppliers who conducted business in the same way with the same buyers.

Gary also explained that HMRC can freely exchange information with the Serious Fraud Office (SFO). These exchanges can go in both directions. If HMRC recognises illegal payments they can provide the evidence to the SFO, while the SFO can advise HMRC of illegal activities to enable HMRC to recover unpaid tax.

I have asked Gary to present a session within the brand new seminar which we are presenting in London on 19th July. Tax-Efficient Remuneration and Reward Systems is a one-day seminar and in his session Gary will explain the role of HMRC in tax investigations and payroll visits. Gary will also be available throughout the afternoon to discuss any specific issues you have with HMRC. This is a rare opportunity to get free advice from Mazars. For details of the seminar please go to this web page.

I look forward to seeing you there.

Stephen Smith
Managing Director
UK Training (Worldwide) Limited