It is being reported that Derrick Bird, the gunman who killed 12 people in Cumbria, feared he would go to prison because of a tax investigation. There is reference to a sum of £60,000 he held in an offshore account and at least one suggestion (in the Sun) that this had created a £100,000 tax bill for the "psycho cabbie".
This being the TaxBuzz blog I'll stick to the tax related elements of the awful story. Attention will shortly turn to HMRC and whether the taxman's tactics included the threat of jail or if this was an unfounded fear. It's very much only ever a last resort and HMRC normally make clear that if a tax evader makes a full confession they can avoid prison. The threat is made to encourage compliance and payment of outstanding taxes.
Plenty of people will try to blame HMRC (a convenient bogeyman) for pushing Mr Bird over the edge. I doubt that's fair although stories abound of HMRC making threats to persuade taxpayers to settle their tax bills. Sometimes they have simply lost patience. Other times they are exceeding their authority but only REAL experts in dealing with tax investigations, and in possession of all the facts in this case, will know this for sure.
Even some accountants who have limited experience of such challenges from HMRC may be unaware of their new powers. This lack of familiarity with tax investigations can lead to protracted arguments that are destined to fail but only after unnecessary professional fees have been racked up - perhaps by someone making unrealistic promises as to what can be achieved. It's one of the reasons that so many accountants choose to work with tax investigation specialists like those who are members of the Tax Advice Network.
Did Mr Bird have good cause for being so worried about the taxman? Had he tried to negotiate with HMRC without professional help? Did they follow their procedures? We may never know. The fact is that HMRC have to walk a fine line. They are rightly charged with collecting tax due in respect of undisclosed income and gains. No one wants to pay up. When faced with tax evasion (for that's what it is) HMRC will issue demands for what they consider to be due and will follow these up. No one should HAVE to engage specialist professional help to resolve matters but it will often pay to do so. That's life I'm afraid.
Unfortunately the fear of prosecution and handcuffs is something that poor guilty souls - who have dared to covet the governments share of the money - usually think of when they get the dreaded buff (now mind you it is often white). Fortunately prosecution is not usually at the head of HMRC's armament and is reserved for the worst offenders (usually). Additionally local offices do not have the powers to prosecute and this is reserved to Serious Civil Investigation offices. So on balance it was probably an unfounded fear that gripped him.
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