So the popular football manager,Harry Redknapp has been acquitted on all charges of tax evasion. It's good news for England football fans, who hope he might soon head up the national team after Fabio Capello's abrupt departure. Obviously it's even better news for Redknapp himself, who always argued that there was nothing illegal about the Monaco bank account he opened in the name of his late dog Rosie.
Despite the failed prosecution, HMRC say they have “no regrets” about taking on the case. It is also clear that investigating so-called offshore ‘tax havens’ will remain one of HMRC’s top priorities going forwards. The fact that the CPS was willing to go after what was, in the football world, a relatively small amount of money, clearly demonstrates its appetite for prosecuting suspected tax evaders.
The 'not guilty' verdict in the case certainly doesn't mean that HMRC will soften their approach. Given the seriousness of the potential penalties, a very high standard of proof is demanded in criminal proceedings. This prosecution was fatally undermined by Redknapp successfully arguing that, if he really was conspiring to evade taxes, it wouldn't have been worth his while doing it for such a (relatively) small amount of money. This was a basic flaw in the prosecution’s case and the jury evidently agreed.
We know that HMRC has been investigating the football industry for many years, armed with the idea that the prosecution of a high profile sports figure would act as a deterrent for anyone with undisclosed offshore assets. So, the publicity generated around this case has, at the very least, raised awareness of the issue of tax evasion to the ‘man on the street’.
The case has also shone a spotlight on Monaco. Due to its sun, secrecy and proximity to the UK, it is known that HMRC will continue to pursue accounts held by UK residents in the principality. Other perceived tax havens further afield in the Caribbean and the Far East are also on the radar.
Indeed, there are sure to be other high profile figures with secretive banking arrangements who watched the Redknapp trial with a growing sense of unease. Even if they are confident they can defend their activities, the publicity that would surround criminal proceedings would be the last thing that a prominent business or celebrity figure would want. Add to this HMRC's new policy of publicly 'naming and shaming' those found guilty of tax evasion under civil procedures, and the attraction of not dealing with a tax problem diminishes further.
Given HMRC's increasing focus on tax evasion, my advice is for people with any uncertainty about their UK tax affairs to consider making a voluntary disclosure. If a disclosure is needed, then a civil settlement can be reached with HMRC, and it would come with a guarantee of no prosecution, complete confidentiality, and an assurance that scrutiny would be confined solely to the issues in question. (This is rather than a 'hostile' investigation which could look at every area of an individual's affairs worldwide).
If carefully managed, such disclosures can achieve favourable results for clients. The current Liechtenstein Disclosure Facility (LDF) can offer attractive discounts on the payment of tax and penalties, as well as immunity from further action. It is a user-friendly process, and available for any funds held outside the UK. The Switzerland/UK Tax Agreement coming into force in 2013 will also encourage Swiss account holders to make voluntary disclosures where necessary.
In summary Redknapp's acquittal will do nothing to reduce HMRC's efforts to find and deal with other suspected tax evaders. Like a football team that's been conceding too many goals, anyone in a dubious position should shore up their defence before it's too late.
10 February 2012