Tax evasion is considered one of the most serious breaches of the law, leading to fines and legal proceedings. Today, businesses bear a particular responsibility for any infringements related to tax non-payment. That means that each company, enterprise, or organization has a specific duty to conduct regular comprehensive audits.
What is Tax Evasion?
Tax evasion is a legal term used to describe the deliberate non-payment of taxes. This can apply to absolutely any area of activity, meaning it’s relevant for all firms, organizations, and enterprises.
A qualified tax fraud attorney can help you understand the situation in more detail to achieve a fair resolution. However, during the proceedings (whether in court or out of court), it’s important to distinguish between deliberate tax avoidance using various fraudulent schemes and accidental errors in the declaration. For example, if errors are made, an employee of the US Internal Revenue Service (IRS) will amend the submitted declaration, and the business owner will pay the difference.
Regarding deliberate false statements and omissions about one’s income, one could face criminal proceedings and severe punishments.
Penalties for Tax Fraud
All individuals engaged in entrepreneurial activities face mandatory inspections by the Tax Service staff. For instance, in California, there are two Codes under which fines can be imposed and other penalties levied concerning the intentional non-payment of taxes. All penalties depend on two main factors:
- The specifics of the particular case.
- Evidence that will be presented against you in support of the refusal to pay taxes.
International fraud is governed not only by national laws but also by international legislation. To regulate this, each country employs a specific legal framework, which includes the Constitution, the Tax Code, the Budget Code, and individual laws related to the payment of various types of taxes and duties.
To navigate the laws of each country, the assistance of an experienced tax evasion defense lawyer is essential. That’s because any form of tax evasion entails long-term consequences. Such consequences negatively impact the reputation of every company, its brand, the quality of life of the owner, and all the employees of the firm.
Types of Tax Fraud
Today, there are many different types of tax fraud, each carrying a specific list of penalties.
Cash-in-hand payments
The initiation of a criminal investigation against a specific suspect can occur after it has been proven that there was a failure to pay taxes when using cash payments. In such cases, the staff of the Tax Service identify such transactions as suspicious.
Entrepreneurs may accept cash payments, but they are obliged to declare them in full to pay all the necessary taxes. If an individual is detained at work while receiving cash, they may lose certain benefits, their employment rights, and also be subject to fines.
Diversion fraud
Another serious offense is the process of illegally importing goods into certain countries, which were originally intended for sale in other cities and countries. This is all done to avoid excise duty, and as such, the list of such goods often includes alcoholic beverages and tobacco products. Those caught face criminal litigation and the penalties include imprisonment or hefty fines.
Hiding Assets
Many high-profile individuals conceal their wealth through secret offshore companies. For instance, if the UK’s HM Revenue and Customs (HMRC) points to a possible “strict liability offence”, which considers a crime when an individual is caught with undeclared offshore income, it is not required to prove the suspect’s intentions to deliberately evade tax payments. As a result, there are no barriers to bringing charges and sentencing, meaning the taxpayer must solely prove their innocence and correctness.
However, against all accusations, HMRC can now put forward a “reasonable excuse” defence to avoid spending time presenting evidence regarding dishonest actions by the taxpayer. In any situation, assistance and support from tax fraud solicitors will be required to delve deeper into the HMRC tax investigations and prosecutions.
Tax Tribunals
If you need to challenge decisions previously made by HMRC, Border Force, or the National Crime Agency (NCA), you’ll have to appeal to the tax tribunal. However, before taking such a significant step, it’s advisable to seek expert advice from a tax evasion lawyer.
International lawyers can represent an individual’s interests in both pre-trial and trial HMRC investigations. Before filing appeals to the High Court, a tax fraud defense attorney must carefully examine all the facts and nuances of the case to competently draft the application.
Remember that often, an improperly drafted appeal becomes the main reason for a loss, leading to serious consequences: the individual will be held accountable for all HMRC expenses.
VAT Fraud
All entrepreneurs whose business income exceeds the specified threshold are required to undergo a mandatory registration process for subsequent VAT payments. Late registration can be a significant reason for the imposition of fines of various amounts. Meanwhile, the HMRC does not take into consideration any arguments related to ignorance of the rules and norms regarding how and when to register.
Before embarking on any independent legal or pre-litigation proceedings, it is advisable to seek advice from a tax evasion solicitor, who can help assess your real chances of success.
VAT fraud entails the following criminal activities:
- Non-payment of VAT (for example, when frequently paying in cash);
- Charging VAT, but refusing to pay this tax to HMRC;
- VAT reimbursement for all expenses related to business activities, aiming to make fraudulent claims.
- “Creative accounting,” during which the company owner engages in document forgery aiming to pay less VAT.
As punishment for fraud, not only is a standard system of fines implemented, but also arrest (for serious cases, imprisonment for up to 10 years is considered). As a result, such fraudulent schemes lead to reputational damage. Moreover, it is in matters related to VAT where the greatest confusion is noted, meaning that qualified legal assistance is indispensable.
Grounds for Defence if You’re Accused of Tax Evasion
All investigations related to the inquiry concerning tax payments are termed stressful. Therefore, if you’ve encountered such improper actions, it’s important to secure support from specialists.
Key grounds for defence:
- Insufficient evidence of underpayment or non-payment of federal tax. To prove tax avoidance, the prosecutor must initially establish the fact that federal tax liabilities were deliberately reduced.
- Insufficient evidence of a deliberate attempt to evade tax or circumvent it through various fraudulent schemes. The government must have adequate proof indicating the fact of an intentional attempt to evade tax payments, to circumvent the tax.
- Insufficient evidence of positive action to support an attempt at fraud. In this case, evidence that the individual intentionally attempted to underpay tax is also required.
- A genuine belief in the accuracy of declared and paid tax liabilities. If there is a bona fide confidence that all your returns fully comply with the norms and standards of the Tax Code, it will be difficult for prosecutors to prove a deliberate disregard for tax obligations.
- Breaches of the constitution leading to the inadmissibility of evidence. Numerous instances are noted where federal agents engage in evidence gathering by resorting to unlawful methods to ascertain all the facts of a case.
You are under investigation by IRS
If you are currently under investigation and facing unfounded accusations of tax fraud, it is imperative to secure legal support from qualified tax solicitors immediately. Our international fraud solicitors offer consultations for all tax affairs, aiming to conduct an urgent independent assessment of the case. It is crucial not to delay addressing the issue, as it is important to commence proceedings as soon as possible to avoid wasting precious time.
Tax Fraud Lawyers
Our solicitors offer bespoke assistance for individuals, company owners, and various enterprises. We specialise in the area of tax investigation and fraud, possessing the necessary experience and legal expertise to address the most complex issues.
We are chosen and trusted for several significant reasons:
- We are ready to provide reasonable arguments for your innocence.
- We’ll assist in negotiating with the Tax Service staff for the resubmission of a correctly completed declaration in case there are some errors.
- Our solicitors will help find a competent solution if you have already been charged with tax evasion.
Our experienced team of international lawyers possesses all the necessary skills that significantly increase your chances of a favorable outcome in any case. We have also established strong working relationships with forensic tax accountants, specialist tax barristers, and independent tax consultants with a proven track record in handling tax evasion cases.
If you’re facing an issue related to HMRC tax investigation or criminal litigation, seek specialist advice from our tax fraud solicitor today.
