Two high-earning IT consultants have become the first people to be jailed for tax evasion under the Offshore Disclosure Facility (ODF).
The ODF and the related New Disclosure Opportunity (NDO) were rolled out in a high-profile campaign by HMRC in 2009 and granted a quasi-amnesty to tax payers with undeclared assets in offshore accounts. The message was essentially come forward now and HMRC will treat you leniently – but if you continue to conceal, you will face much harsher penalties when the tax man catches up with you.
Roderick Smith and Stephen Howarth ran an IT consultancy, Goldlogic Control Systems, with many of their clients based in Germany. Both failed to register the true extent of their sales with HMRC, siphoning off much of their profits into bank accounts based in the Isle of Man.
Smith had declared one of these accounts, amounting to £49,650, during the original campaign; however, both men chose not to register the others. After a tip-off from the German tax authorities, HMRC investigators unearthed sales in Germany amounting to £1,255,615 and estimated that the two men evaded £500,000-worth of tax over six years.
At Liverpool Crown Court, His Honour Judge Warnock sentenced Smith to 15 months in prison and Howarth to 12 months.
Commenting on the sentences, the Revenue’s assistant director of criminal investigation, Mike Preston, said: “By failing to declare the true level of sales in Europe, and pay tax due on these earnings, they must now face the consequences of their actions in jail. HMRC is clamping down on tax evasion and targeting UK taxpayers using offshore accounts to disguise their wealth.”
Many PAYE Umbrella Company Employees will agree.