U.K. Tax Probes Put Advisers in Crossfire, Law Firm SaysSuzi Ring and Andrea Gerlin
British tax authorities’ pursuit of evidence in tax evasion and money laundering investigations are raising client-confidentiality issues for lawyers and accountants.
In the last two years, Her Majesty’s Revenue & Customs has filed about 3,000 notices to professional advisers such as accountants and lawyers seeking information about their clients, according to data compiled by London-based law firm RPC LLP. The requests were tied to investigations into suspected tax evasion and money laundering.
HMRC is pressing “to increase the number of criminal prosecutions for tax evasion” to ensure “a level tax playing field,” according to an e-mailed statement from the agency. Disclosure notices are just “one of a range of measures we use to ensure the right tax is being paid.”
Responding to these requests can be challenging as providing too much information can put the advisers at risk of breaching client confidentiality, while too little can lead to criminal liability for failing to comply with the notice, RPC said.
“HMRC is becoming more reliant on the documentation and information it obtains from professional advisers when building a criminal case against taxpayers,” RPC tax lawyer Adam Craggs said. As a result, its “crackdown on tax evasion is catching professional service firms in its crossfire.”