France: Why your UK accountant, solicitor and financial adviser are now tax informants

THE NEW LAW

Tax evasion is now a money laundering offence and all of the laws which apply to drug barons and terrorists, equally apply to tax evaders. New UK laws commencing in full in March 2004 now impose an obligation on your accountant, solicitor, and financial adviser to secretly report any client they suspect is evading tax – even if the evasion relates to another country. If they do not report you, they can go to jail. If your adviser hints in any way that they are making a report, that too is an imprisonable offence. There is no minimum limit – even 10p must be reported. There is no time limit.

These new laws do not apply in France.

WHY HASN’T MY ACCOUNTANT OR SOLICITOR OR

Whilst they must report any suspicious transactions, they also must not hint in any way to you that they might be making a report. If they were to hint about it, they would have committed the crime of “tipping off”. As of August 2003, over 75 per cent of the professions had received training about these new regulations. Your accountant, financial adviser or solicitor is not obliged to notify you of the new laws, especially if in so doing they are running the risk of tipping you off.

WHAT ABOUT CLIENT CONFIDENTIALITY IN THE UK?

These new laws override client confidentiality as we have come to understand it. It is a criminal offence not to report you. It is also a criminal offence to hint in any way that a report may be made. Your accountant, solicitor of financial adviser has to deny making a report if asked. The only time when client confidentiality exists is if you were to consult your advisers about actual criminal charges being made against you.

It is wrong for the adviser to alert the client in any way. These laws apply not only to professional advisers but also bank managers, antique dealers, estate agents and many others.

SUPPOSE MY ACCOUNTANT OR SOLICITOR OR FINANCIAL ADVISER IS JUST “SUSPICIOUS” BUT HAS NO PROOF?

Then they must still report you. The term “suspicion” falls well short of proof or knowledge. They have to report anything which is suspicious, and it is not a defence to claim that they had no proof. Indeed, it is not a defence to claim that they the adviser was not suspicious in circumstances when they should have been.

“A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust amounting to a slight opinion, but without sufficient evidence” Chambers dictionary

DOES THE ACCOUNTANT OR SOLICITOR HAVE TO INVESTIGATE FURTHER BEFORE REPORTING?

No. Once a suspicion has been formed, it must be reported to the National Criminal Investigation Service (NCIS). The NCIS has drafted in staff from the HM Revenue and Customs to cope with the new reports which they are receiving.

SO WHO CAN I HAVE A CONFIDENTIAL TALK WITH IN ORDER TO RECEIVE ADVICE ON THIS ISSUE?

No-one in the UK as all advisers, accountants and solicitors are now unpaid Inland Revenue informants. Blevins Franks Offshore (in Malta, France, Spain, Cyprus and Portugal) is not obliged to report under these laws, and can advise on UK as well as overseas taxes. Our overriding objective is to legitimately structure clients’ affairs to avoid the risks inherent in this and other similar legislation.

SUPPOSE I HAVE NOT PAID MY FOREIGN TAXES PROPERLY, BUT I HAVE PAID EVERYTHING CORRECTLY IN THE UK – DOES A REPORT HAVE TO BE MADE?

Yes. The accountant, solicitor financial adviser must report any crime, wherever it may have occurred, if the offence would have constituted a crime in the UK. NCIS, having received such a report, may pass it on to the overseas tax jurisdiction (eg, France).

WHAT SUSPICIONS NEED TO BE REPORTED?

Concealing, disguising, converting, transferring, removing, acquiring, using or possessing criminal property (eg, monies which have not been taxed). It includes entering into arrangements to help another person in the acquisition or retention, use or control of criminal property. It is very widely drawn. It does not have to have taken place in the UK – criminal conduct is defined as conduct that would be an offence in the UK had it been committed in the UK (even though it might not be a criminal offence overseas).

SUPPOSING I HAVE AN OFFSHORE PROPERTY IN A COMPANY AND I AM UK RESIDENT?

If you have not paid UK tax on the “benefit in kind” charge every year, then this is reportable.

SUPPOSE I ACCIDENTALLY COMMITTED A CRIMINAL OFFENCE?

In general it is not possible to accidentally commit a criminal offence. A genuine error, promptly correctly, is not a criminal offence. But if you had made an error, but then do not correct it, you are committing a criminal offence and it is reportable.

SUPPOSE I TALK TO AN ACCOUNTANT, DISCLOSE SOMETHING NAUGHTY, BUT DON’T INSTRUCT THEM?

If they are in the UK, they still have to report.

You are only safe to have confidential discussions about these sorts of matters with individuals who are outside the UK.

© Blevins Franks International Limited 2002

“Living in France” 5th Edition 2006, Bill Blevins & David Franks.
Reproduced with the permission of Blevins Franks.

Further information on this topic can be found in “Living in France”, 5th Edition by David Franks & Bill Blevins.