G20 Officials Want to Tax Tech Giants

On Saturday, G20 Officials said that leading world economies must show unity when dealing with aggressive ‘tax optimisation’ by global digital giants. This included tech giants such as Google, Amazon and Facebook.

The Organisation for Economic Cooperation and Development (OECD) has been developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD said that this could boost tax revenues by a total of $100 billion a year.

No Time to Wait

The German Finance Minister, Olaf Scholz, told a tax seminar that there was “no time to wait for elections”. He also added that “this needs leadership in certain counties”. While saying this, he was looking directly at the US Treasury Secretary Steven Mnuchin, who was sitting next to him at the seminar.

The taxing of digital firms and the effect of the coronavirus on the economy are two major topics being debated on by the G20 financial leaders. These topics will be discussed during their talks in Riyadh this weekend.

Minimum Tax Level

The OECD want to set a minimum effective level to tax big tech companies such as Facebook and Google. They seek agreements by the start of July 2020, with an endorsement by the G20 by the end of the year.

OECD head Angel Gurria told the seminar that a “coordinated answer” was the “only way forward”. Many questions remain about this policy coming into force.

Digital Tax

Many European countries, like France, Spain, Austria, Italy and Hungary, already have a plan for digital tax or are working on getting one. This creates a risk of a highly fragmented global system that does not achieve the aims of the OECD. Mnuchin added that “you cannot have in a global economy different national tax systems that conflict with each other”.

Facebook Responds

The Chief Executive of Facebook, Mark Zuckerberg, responded saying that he would be ready to pay for tax in Europe and would welcome a global OECD solution that would make taxes the same across different economies.

The Financial Impact of Storm Ciara and Storm Dennis

Storm Ciara and Storm Dennis ushered in the new decade with a very wet and extremely windy start for many locations on the British Isles. With rain damage, wind damage and incessant flooding continuing to the time of writing, the total financial impact remains uncalculated. However, in light of the damage suffered and the state of current claims, the insurance industry is estimating the cost of both storms to be around the half a billion pounds mark. Experts have warned that the current figure of £425 million is set to rise, with no signs of the extreme weather conditions abating.

Starting on the 9th of February, Storm Ciara began its aerial bombardment of unprecedented levels of rain and strong gusts of up to 97 mph in some places. Hurricane-force winds, flooding and extensive damage was wrought upon the predominantly Northern English town that felt the storm’s effects the strongest. Travel and energy infrastructure was severely disrupted as trains were cancelled and power outages affected thousands. Under the effects of Storm Ciara, 220 flood warnings were issued. Not long after Ciara, Storm Dennis arrived on British shores battering the nation for the second week in a row. Almost 200 flood warnings were issued, alongside 326 flood alerts.

Mohammad Khan, general insurance leader at PwC, said: “Clearly there has been far more flood damage from Storm Dennis compared to Storm Ciara – which was mainly wind damage. Unfortunately, due to the continuing rainfall there is greater risk of further flooding.” The insurance industry representative further added, “Although it is still very early to assess the full impact of the severe weather, our initial estimates for UK insurance losses due to Storm Dennis are approximately £175m to £225m.” “This is additional to the estimated £150m – £200m of insurance losses caused by Storm Ciara,” the insurance expert warned.

Manchester United Financial Warning

Following a slump in on-field success, an annual report into the world’s biggest football clubs signals some concerns for Manchester United. Using a unique formula which assess football clubs in financial terms, the Soccerex Football Finance 100 considers parameters such as squad value, assets, cash holdings potential investment and overall debt figures. After seven seasons without a Premier League title, Manchester United have dropped from eighth place on the Soccerex index to sixteenth. Meanwhile, North West rivals Liverpool have leapfrogged Manchester United and currently occupy a much higher position. Furthermore, United’s other Premier League rivals, including Manchester City, Tottenham, Arsenal and Chelsea, have also overtaken the Manchester giants. Even other lesser European and international teams have also surpassed United, including German teams RB Leipzig and Hoffenheim, as well as Chinese Super League team Guangzhou Evergrande.

Summarising the findings of their report, Soccerex Football Finance stated, “Manchester United continues to be the biggest revenue generator in English football and the most popular in terms of match attendances, but the club is currently enduring, by their own high standards, a very mediocre period. This has started to impact in a number of ways, not least a €100 million drop in the value of their squad, a fall in cash reserves of more than €50 million and increased debt levels by a similar amount.”

United insiders have criticised the methodology used to investigate findings by Soccerex. According to other measures, such as the Deloitte report for revenues, Manchester United came top of the list for Premier League clubs and third overall.

Japan’s Shrinking Economy

Japan’s economy shrank at the fastest rate in five years towards the end of 2019. It was hit by a rise in sales tax, weak global demand and a major typhoon. The economy took a big hit from these factors.

GDP Drop

The annual GDP (gross domestic product) fell by a greater amount than the expected 6.3% in October – December. Furthermore, there are also worries about the coronavirus. This virus has affected most parts of the world, particularly China and its neighbouring countries. Economists fear that the coronavirus epidemic may worsen Japan’s shrinking economy. This can already be seen after Nissan had to shut down a factory in Japan.

Japan’s economy is the world’s third biggest economy. If it falls into recession, there can be negative effects for the global economy. Japanese consumer spending fell 2.9% after the sales tax was increased in October. It went from 10% to 8%, causing Japanese spending to drop. This is another sign of the economy shrinking.

Major Typhoon

The country also had a major typhoon: Typhoon Hagibis. This disaster hit Japan during the same month that the sales tax was increased and the consumer spending was cut. The typhoon was an extremely violent storm and at least nine people were reported dead. It cost the Japanese economy almost $10 billion and insured losses minimally in the billions. Although Japan is prone to such blows, this may have been the costliest environmental disaster in 2019.

CoronaVirus

 Coronavirus has deeply troubled the world and the economy. Investors are waiting to see if the economy will rebound after the coronavirus has forced factory shutdowns and a drop in tourism. Japan’s economy minister, Yashutoshi Nishimura, said the Japanese government was ready to take the necessary steps to deal with the coronavirus outbreak and it’s impact on the economy and on tourism.

 

Rod Bond Tax Fraud Documentary: HMRC and The Case of One Formula LLP

In his television return, Hollywood A-list actor Rod Bond investigates the tax fraud case of Manchester-based One Formula LLP. After an absence from the small screen spanning decades, Roderick Bond hosts “Rod Bond Tax Fraud and HMRC.” The multi-part documentary series examines tax fraud in more depth than hitherto publicly witnessed. Comprising six episodes, the actor accompanies HM Revenue and Customs as they launch their investigation into the dealings of Manchester financial firm One Formula LLP. Combining the financial and fiscal expertise of a financial advisor, city trader, insurance advisor, a former Wales rugby international and a former police officer, One Formula LLP promised its clients reduced tax bills and offered tax efficient investments.

However, with Roderick Bond joining HMRC from the tax fraud case’s seminal stages, a close look is offered into the financial firm’s activities. Following the discovery of forged military historical artefacts at a Cold War Tank Museum supported by the firm, suspicion is roused, ultimately leading to the involvement of HMRC’s Criminal Investigation Department. Roderick Bond accompanies HMRC investigators as they pursue the suspected tax fraud, arriving at One Formula’s headquarters in central Manchester. Moreover, an animal welfare charity which administered a cats and dogs shelter, associated with One Formula, is also visited. Furthermore, the premises of a knife crime charity, named “One Formula to Tackle Knife Crime,” also linked to the firm also appear on the documentary.

From the supercar lifestyle enjoyed by the tax fraudsters, to details of how they pulled off their brazen tax scams and schemes, Roderick Bond offers a thorough exploration of his subject. In a follow up episode, promised by filming company Manchester F1 Production, the conclusion of the case is to be aired later this year. Roderick Bond visits Alex White, of the Crown Prosecution Service, Jane Bewsey, who was prosecuting in the case against One Formula and the judge who sentenced the tax fraudsters, Joanna Korner, also makes an appearance.

 

UK Film Tax Relief: Ingenious Media Appeal Against HMRC

In an appeal that could cost HM Revenue and Customs up to £1 billion, Ingenious Media plans to launch an appeal against the tax man over a controversial film industry tax relief scheme. Promising tax relief and a reduced tax bill, celebrities were persuaded by Ingenious Media into a film partnership scheme that have since proven very controversial. Numerous sports stars, celebrities and wealthy individuals have been caught up in the furore surrounding various film industry tax relief scandals. To name a few, David Beckham, Jeremy Paxman and TV favourites Ant and Dec invested money in the schemes devised by ingenious media. With an unquestioned reputation, the stars felt Ingenious Media to be worthwhile investment, since the company has funded more than sixty films including Avatar and Brooklyn.

The appeal from Ingenious Media comes after a tribunal upheld HMRC’s charges against the company, finding that investments from individuals into its tax relief scheme did not warrant tax relief. Described by a former HMRC boss as “scams for scumbags,” the government agency has argued that rather than a genuine and legitimate investment scheme, the whole enterprise was structured for the purposes of tax avoidance. As a result, HMRC is refusing to grant tax relief and demanding payment of outstanding taxes with interest. The case represents one of the biggest financial challenges to HMRC, with investors claiming around £620 million worth of tax relief. Combined with interest, this means that the best part of £1 billion is at stake, if HMRC lose the case.

The Limited Liability Partnerships were launched around ten years ago and were able to acquire millions of pounds in investment. Household names, high-flying City workers, entrepreneurs and business elites were attracted by the tax relief scheme. However, originally marketed as tax efficient, HMRC turned around and issued investors with huge tax bills, arguing that the investments did not warrant tax relief.

One Formula Limited Liability Partnership: All You Need to Know about Tax Exemptions, Tax Relief, Tax Credits and Tax Rebates

Manchester’s One Formula LLP is touting itself as the country’s hottest tax efficiency provider. Consisting of a team of financial experts, which includes a financial advisor, city trader, insurance advisor, ex-Wales international rugby player and a former police officer, the organisation claims to have secured tax savings for super-rich clientele estimated to be in the millions. With a multi-faceted approach, the financial and fiscal experts at One Formula LLP support their clients in securing tax exemptions, tax relief, tax credits and tax rebates. From managing various multi-million pound investment portfolios to supporting smaller clients managing their taxes and dealings with HMRC, the Manchester firm has seen an exponential growth in recent times.

As one of Manchester’s most powerful business conglomerates, One Formula LLP has gradually become a well-recognised and widely-renown company. With its ability to support the super-rich in reducing their tax bills, word has gotten around fast. According to the latest rumours, One Formula LLP are working as the primary financial advisors to a raft of local footballers. Furthermore, not only do they boast some of the country’s richest football players from Manchester City and Manchester United on their books, but it has been mentioned that Manchester City manager Pep Guardiola has enlisted the company’s help.

Beyond the company’s financial and fiscal expertise, executives have also been keen on supporting a variety of causes through recently established charities. The largest charitable project supported by One Formula Limited Liability Partnerships is a dogs and cats home, supported through an animal welfare charity. Alongside the animal shelter, the company has also announced the establishment of a knife crime charity, seeking to support local community and grassroots initiatives working to eradicate knife crime.

Ways HMRC Catches Tax Fraud and Tax Evasion

Connect

Connect is a powerful computer programme which sifts through reams and reams of financial data to literally connect disparate transactions with one another. It its hunt for tax fraud and tax evasion, HMRC is able to detect relationships between apparently unconnected transactions. Deployed since 2010, Connect has helped HMRC recoup millions lost to tax fraud and tax evasion.

Global cooperation

Once upon a time an offshore back account, outside of the HMRC’s jurisdiction, would have been a safe place to stash the proceeds of tax fraud or tax evasion. However, as of September 2017, following a joint global crackdown on tax evasion and tax fraud, a “common reporting standard” has been put in place. According to the new rules, details of expats’ earning will be related to their home governments. Numerous tax investigations from Crown Dependencies, Overseas Territories, the US and Switzerland are already underway.

Ghost workers and moonlighters

HM Revenue and Customs defines those workers whose incomes are unknown to the government body responsible for taxation as ghost workers. Moonlighters are those whose partial income is known to the HMRC, but who do not declare additional income. Through a targeted engagement and increased focus on these two groups of tax fraudsters, the HMRC is constantly in surveillance.

Carrots and sticks

In a bygone era, HMRC would coax people committing tax fraud and tax evasion into confessing. By confessing and settling their accounts with HMRC, tax fraudsters could hope to avoid additional penalties and prosecutions. However, recently, since 2015, HMRC has been coming down hard on those found guilty of tax fraud or tax evasion. More recently, HMRC has resorted to “naming and shaming” individuals it has found guilty of tax avoidance. In a list published on its official website, details of those found guilty of tax fraud are updated every three months.

 

Ghost Brokers under HMRC Investigation Jailed for Tax Fraud and Insurance Fraud

Elina Jaksone, 36, and Gagik Kyriacos Manucharyan, 40, were the subject of a HMRC investigation relating to both tax fraud and insurance fraud. Together, the couple from Kent orchestrated as “ghost insurance brokers,” whereby fraudulent insurance was provided to unwitting customers. Furthermore, the pair of fraudsters failed to declare the earnings from their insurance fraud enterprise to HMRC and were thereby guilty of tax avoidance. The two fraudsters’ vehicle insurance fraud involved supplying insurance providers with false details, in order to reduce the cost of insurance premiums, for customers who remained unaware. While enabling customers to purchase insurance cover at reduced prices, most were actually left without cover as their fraudulently acquired policies were potentially null and void.

For each policy they secured, the fraudsters netted £100. Ultimately, from the insurance fraud scheme the pair earned a whopping total of almost £1 million. However, apart from the vehicle insurance fraud, the pair failed to declare their earnings to HMRC. This meant that a tax bill on the £920,000 that they earned remained outstanding. As if this wasn’t enough, Jaksone also fraudulently claimed £82,000 in tax credits and pension credits. Her tax credit scam relied on her pretending to be a single mother with high childcare costs. Furthermore, using her mother’s details, the crooked fraudster also committed pension credit fraud and fraudulently claimed winter fuel allowance payments. On top of this, in an attempt scuppered by HMRC, the serial fraudster also sought to claim pension credits in her father-in-law’s name.

Assistant director of HM Revenue and Customs, David Margree declared, “Jaksone and Manucharyan cheated honest, law abiding people, spending their ill-gotten gains on a lifestyle that many of us can only dream of. They also cheated their customers by providing them with inadequate insurance policies. HMRC will not tolerate fraud. We work closely with other agencies, including the Serious Organised Crime Agency, the Department for Work and Pensions (DWP) and the financial sector to tackle all forms of fiscal fraud and protect the interests of the public.”

HM Revenue and Customs New Home in Greater Manchester

Her Majesty’s Revenue and Customs will be moving into Greater Manchester, at one of thirteen modern regional centres to be located across the UK. Located in Salford, the seven-storey block, 3 New Bailey, will become HM Revenue and Customs’ state-of-the-art regional centre. HMRC’s newest office in the North West will begin to be staffed from Spring 2022. 2,000 from various other locations will move into the new premises. In 2027/2028, the new phase of the regional centre will be set to open and welcome another 2,500 staff. Currently, these members of HMRC’s staff are based in Trinity House in Dearman’s Place, Salford. Additionally, across the North West region, there are currently 24 offices where HMRC staff are based. Ranging in size, hosting between almost a few thousand and just more than a dozen staff, these disparately sized offices are a relic of the 1960s and 1970s.

This expansion of staff is welcomed by local businesses, located around Chapel Street and New Bailey districts, right atop Salford’s border with Manchester city centre. The state-of-the-art facilities and expanded office area will allow HMRC to provide staff with modern technological infrastructure and improved training facilities. It is expected that the upgraded facilities and integrated working area will help HMRC support more skilled jobs and improved career progression paths, eliminating the need for staff to move across the country. Chief executive of HM Revenue and Customs, Jon Thompson, said, “HMRC’s presence in Salford, Manchester and the wider North West is longstanding and well-established. The new regional centre is a clear demonstration of our commitment to the area and its economy. New Bailey will deliver the flexible and collaborative working environment that our staff need and the centre will be a hub of highly-skilled career opportunities.” The new facility will also secure the jobs of thousands in the region.