John - Tax credit fraud and tax evasion - Tax Credits Act 2002
John ran a business hiring out 'stretch limos' in Cardiff for weddings, 'hen nights' and similar functions. But business was not good and he had nowhere secure to park the cars. So he bought a house with a drive and a bit of land, with the aid of a mortgage. He couldn't make ends meet and applied for tax credits. Over the phone he told the Tax Credits Office that he was making "bugger all" from his business.
Even with the tax credits he received he still could not live within his means and borrowed more on second (and third) mortgages on his house and other loans.
Probably as a result of a tip-off to the effect that John lived in a large house and owned several limos, HM Revenue & Customs launched an investigation into John's tax credit claims and tax returns. They obtained copies of his bank statements showing occasional large deposits and concluded that he had a substantial income and that his case merited prosecution in the Crown Court for tax credit fraud and tax evasion.
In advance of the trial the prosecution produced in evidence John's bank statements, recordings of his telephone conversations with the Tax Credits Office (including comments John had made to his wife whilst on 'hold'), and computations of his income tax liabilities based on the credits to his bank accounts. The tax evaded appeared to be a significant sum.
I was instructed by the defence to check the computations of tax evaded and tax credits overpaid. I soon realised that HMRC had treated deposits received by CHAPS transfer as taxable income of the limo hire business - but these were in fact the proceeds of John's re-mortgages and loans. There were a number of other areas in which the treatment adopted by HMRC appeared to be inappropriate.
I prepared a report and then met with HMRC. They agreed that their computations of tax evaded and tax credits over-claimed were incorrect. Prior to the matter coming to trial new schedules of tax evaded and tax credits over-claimed were agreed - in much lower figures.
I attended the court at which John pleaded guilty on the basis of these lower figures and received a suspended sentence.