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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Agent operational guidance: dishonest tax agents: examples of dishonestly doing something

Example 1

Mr Colstrope was an unqualified, sole proprietor tax agent acting primarily for migrant workers in the construction industry.

During a compliance check into one of Mr Colstrope’s clients the caseworker found that claims for materials were supported by invoices that, on checking, were proved to be false. The client told the caseworker that the invoices did not belong to him and were not part of the records he gave to his agent. Mr Colstrope did not respond to the caseworker’s letters or phone calls.

The caseworker contacted the Agent Compliance Team (ACT), see CH880400, because they suspected that Mr Colstrope had created the false invoices in order to fraudulently claim repayment of CIS deductions.

When specialist officers interviewed Mr Colstrope he admitted that he had created the false invoices, and had done this for all of his construction industry clients. His clients had received excessive refunds of CIS deductions while he had received a percentage of those refunds as his fee.

Mr Colstrope, while acting as a tax agent, had dishonestly prepared false documents in order to bring about a loss of tax.

Example 2

Mr Berrick was a qualified tax agent. He was a member of a professional body, operating through a limited company (Stoke & Church Ltd) which had three other employees. The practice had 560 clients who were mainly employees in the construction industry.

Stoke & Church Ltd routinely submitted self assessment returns for its clients that showed travel and subsistence claims that generated tax repayments.

A pattern emerged where over 100 of Stoke & Church Ltd’s clients had submitted amended self assessment returns showing increased expenses generating further tax repayments.

When specialist officers interviewed Mr Berrick about these claims he explained that there was no face to face contact with clients; all fact finding was carried out through an online question and answer exercise. He said that the initial return was correct and was filed with HMRC by Stoke & Church Ltd on the client’s behalf. The company took a percentage of the tax repayment as its fee.

Mr Berrick admitted that the amended returns were false and submitted without the client’s knowledge. The repayment was not passed to the client, but was retained by Stoke & Church Ltd.

We have established that there has been dishonest conduct within Stoke & Church Ltd. We must also identify the individual responsible for the dishonest conduct, so that we can issue them with a conduct notice, see CH881200.