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Taxman forcing lawyers and accountants to provide client information

By May 12, 2016January 9th, 2020No Comments

The number of lawyers and accountants in Britain being ordered to provide existing and previous client details to HMRC, by tax investigators issuing production orders, are likely to rise, with almost 1,500 being issued last year alone, out of a total 8,000 over the last five years.

The production orders are being issued by HMRC as part of investigations into tax evasion and money laundering pursuant to The Police and Criminal Evidence Act 1984 (PACE 1984), Sch (1), para 4 in place of Section 20BA Taxes Management Act 1970 (TMA 1970), which is effectively still in being along with The Value Added Tax Act 1994 (VATA 1994).

The difference is that costs can be applied under PACE 1984, Sch (1) and not under Section 20BA TMA 1970 or VATA 1994.

The production orders are applications made by HMRC for the production of “special procedure material”.

Special procedure material is defined in PACE 1984, section 14 as: –

“generally: material in the possession of a person who acquired or created it in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office; and who hols it subject to an express or implied undertaking to hold it in confidence; or it is held subject to a restriction such as an obligation of secrecy contained in an Act.”

If the orders are not complied with it can proceed to the lawyer/accountant being charged with a criminal offence.

Production orders are causing concern over professional privilege as lawyers believe most tax advisers and accountants will not be familiar with the orders and therefore their obligations to comply with such, and firms that accidentally provide more information to HMRC than required could be at risk of legal claims from the clients concerned.

As lawyers and accountants etc. hold customer information under a duty of confidence, HMRC are required to use PACE 1984, Sch (1) to obtain production orders for information held by such entities.

Professional privilege is not the only concern in connection with the production orders being issued, there is also worry over the amount of business disruption the orders may cause to professional service firms, especially ones on a smaller scale.

This is an extremely important notice which probably will go unnoticed without some publicity.
Danielle Firth of KinsellaTax 2014 Ltd believes that the HMRC are issuing orders against lawyers and accountants in order to shake up the investigation of evaders, who leave themselves open for criminal prosecutions.
But of course, as Danielle Firth points out, these procedures can be avoided by a simple disclosure to HMRC.
Danielle Firth has been dealing with such voluntary disclosures to HMRC for the past eight years and is available to discuss these procedures on 01625 462 899 or by email on danielle@kinsellatax2014.co.uk.