Tax evasion flourishing with help from UK firms
A flourishing industry which helps people evade UK tax has been uncovered following an investigation by the BBC's Panorama programme.
One company formation firm said the odds of getting caught by the UK tax authorities are roughly equivalent to winning the lottery.
The programme secretly filmed corporate service providers offering services that would break the law.
Her Majesty's Revenue and Customs says tackling tax evasion is a priority.
Tax evasion costs the UK taxpayer an estimated £4bn a year.'Sham directors'
Secret filming by the BBC as part of a joint investigation with the Guardian newspaper and the Washington-based International Consortium of Investigative Journalists identified a number of corporate service providers - firms that specialise in setting up companies both in the UK and abroad - willing to facilitate tax evasion and turn a blind eye to criminal activity.
End Quote Tristram Hicks Money laundering expert
What I'm shocked by... is the apparent ease with which you've discovered these people”
In one instance, an undercover reporter posing as a businessman with £6m in undeclared income sitting in a Swiss bank account is advised to move his money into a complex structure involving an anonymous foundation in the tax haven of Belize, which he would control in secret.
James Turner of Turner Little in York, which specialises in forming companies, assured the undercover reporter that his company already had 10,000 of these structures up and running with secrecy guaranteed.
"We've had Inland Revenue investigations on clients that have used companies like this... and they haven't got to the money," Mr Turner said during secret filming.
The complicated structure proposed by Mr Turner also involved the use of nominee directors to help keep the undercover reporter's name off company paperwork.
Nominee directors can be legitimately appointed to run companies on behalf of others. But according to James Turner, his nominees would not be running anything at all.
In other words, they would be a sham.
"They won't even know that they are a director, they just get paid," he said, adding that the directors' signatures could be provided simply by using a stamp.
Panorama: Find out more
- Darragh MacIntyre presents Undercover: How to Dodge Tax
- BBC One, Monday, 26 November at 20:30 GMT
Jonathan Fisher QC, one of the UK's leading barristers specialising in white collar crime cases, said that what was being proposed would break the law.
"If this proceeded and the company was set up and it was set up in the way in which it is being discussed, then plainly some very serious criminal offences would be committed."
Those potential offences would be helping to cheat the revenue and launder the proceeds of crime.
Mr Turner denied any allegations of criminal misconduct. Turner Little said it takes its statutory and regulatory obligations seriously but said that once an internal investigation has been completed, if appropriate, it will take action.
Panorama also discovered corporate service providers offering to appoint sham directors to UK companies. UK law states that directors are responsible for the companies they run and should know what those companies are doing.'Sark Lark'
The use of sham directors was supposed to have been stamped out in the late 1990s after a scandal on the Channel Island of Sark.
In what became known as the "Sark Lark" one islander was discovered to be the director of more than 1,300 companies. Between them, the 600 inhabitants of the island held 15,000 directorships. New laws have reduced that to fewer than 50 posts today.
But the Panorama investigation found that the Sark Lark is not dead - rather it has moved and gone global.
One corporate service provider based in Dubai, Atlas Corporate Services, showed a list of its 19 nominee directors to one of Panorama's undercover reporters.
The programme discovered they had held more than 6,000 UK company directorships. The company involved said there is nothing unlawful in Dubai about the use of nominee professional directors.'Tip of iceberg'
Panorama also approached other firms posing as the representative of corrupt Indian government figures who wanted to invest in the UK.
Russell Lebe, Managing Director of Readymade Companies Worldwide in Bushey Heath, Hertfordshire, told an undercover reporter that, if approached by the Indian authorities about tax evasion, "we wouldn't give a monkey's".
Despite being told that the fictional clients were earning "commissions" on government contracts that they wanted to move offshore, Mr Lebe said he would be content not to know their identities and even agreed that the undercover reporter could front for them by pretending to be the owner.
"There'll be no emails and nothing in writing to say that anyone else is the owner and it'll all go under your name. Absolutely fine," he told the reporter.
Readymade Companies Worldwide said they would not provide company formation services if they knew or suspected they would be used to launder the proceeds of crime or defraud tax authorities.
As a precautionary measure, they said they have asked a law firm to review their procedures and will provide staff with further training.
Former Metropolitan Police Detective Superintendent Tristram Hicks, a leading expert on money laundering, said: "What I'm shocked by, and concerned by, is the apparent ease with which you've discovered these people.
"It tells you that maybe it is the tip of the iceberg that you have discovered by scratching the surface and that our regulation regime is not catching enough people."
In a statement, HM Revenue and Customs, which regulates the 2,467 registered trust or company service providers in the UK, said most in the industry have nothing to do with criminal activity.
But it did confirm that it has never prosecuted a single corporate service provider for breaching money laundering regulations.
BBC One, Monday, 26 November at 20:30 GMT and then available in the UK on the BBC iPlayer via the link above.