No prize for spotting where this comes from.
Correct. It was HMRC’s Chris Martin (who was propelled into the spotlight when Harry Redknapp and Milan Mandaric were found not guilty of tax evasion) putting a good spin on a rather embarrasing defeat.
It would be rather pointless to recap the events of this rather well publicised trial. But what might be more interesting is to think about what this means to other tax payers.
First if you are a sportsperson then it’s probably good news. My understanding of the oft mentioned £8m campaign was that it related to the whole operating to look into fraud in sport (not just Redknapp’s trial). I also understand that it has led precisely nowhere. If anyone from the Met is reading this, feel free to set me straight. So politically, and economically, it seems that this campaign might be over faster than you can say “transfer fee”.
If you are a tax evader, it probably makes no difference. I’ve not yet read the full case report but if HMRC can’t prove tax evasion then they won’t get very far. I don’t want to do their work for them, but HMRC’s powers to get information from offshore tax havens is always increasing and the UK has entered into a number of Tax Information Exchange agreements that greatly assist in tracking down fraudsters. If you are one of those, then Chris Martin (not that Chris Martin – the one at the start of the blog), is probably right. There are a number of disclosure facilities which may result in a reduction in any penalties and it is worth speaking to an expert before turning yourself in!
There is nothing wrong per se in having bank accounts in tax havens, provided that you make sure that any tax planning is done properly.
If you are expecting a bonus, I also wouldn’t take this as carte blanche to become friends with your boss and ask for some seed money for your investments. The law hasn’t been changed by this judgement – a bonus is still taxable, and it will be a question of fact as to whether or not a payment is a bonus. The assumption should generally be that it is taxable, and any derogation from this would require professional advice.
There are also a lot of rather more “vanilla” and rather more tax efficient ways of motivating employees such as share options, which should be considered before paying sums into bank accounts in Monaco in the name of your dog!
If you would like to discuss any of these points, please contact our wealth management or employment teams.