Tax management specialists are helping wealthy individuals and companies avoid paying around £4 billion a year tax with sham companies fronted by nominee directors.
The firms responsible say the chances of them or their clients being caught by HM Revenue & Customs are equal to someone winning the National Lottery jackpot.
The controversial schemes have never been far from the headlines, but now the BBC’s Panorama programme has secretly filmed some of these providers in action.
The issue surrounds corporate service providers which are offering tax advice that HMRC claims breaks the law.
Not only do the schemes help minimise tax payments, but also allegedly offer criminals a way to launder cash.
Undercover filming
Undercover journalists filmed James Turner, of Turner Little, a firm based in York, reveal that his firm which specialises in company formation had already created 10,000 such complicated structures – with secrecy of those behind the company guaranteed.
He said: “We’ve had clients investigated by the HMRC using companies like this and they haven’t got to the money.”
Mr Turner’s revealed that by using nominee directors he could keep a client’s name off the company’s paperwork.
It’s quite legitimate for a nominee director to be appointed and run a company but Mr Turner boasted the nominees he uses would not have any involvement with the company. They are simply paid for registering their names and do not even know which companies they are connected with.
UK company law states that directors are responsible for the companies they run and should be aware of their company’s finances and accounts. Mr Turner’s proposition would allegedly be a sham arrangement.
Criminal offences
The programme also interviewed one of the UK’s leading barristers on white collar crime, Jonathan Fisher QC, who said such a structure would break the law.
He added: “If the company was set up in the way that is discussed then plainly very serious criminal offences would be committed.”
When approached again, Mr Turner denied allegations of criminal misconduct and explained his company abides by statutory and regulatory obligations. Turner Little said appropriate action would follow an internal investigation.
The Panorama investigation featured several corporate service providers around the country offering to create similar company structures.
The HMRC told the programme that the vast majority of the UK’s 2,467 registered trust or company service providers had nothing to do with criminal activity but they did confirm that they have never prosecuted a single corporate service provider under money laundering regulations.