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Fail To Declare One Btl Income And One Can Lost The Entire Portfolio

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Basically about a chap moonlighthing where the tax evaded and penalty was proven to be around £5k.

But this guy has £700+k of assets which was purchased using fund he obtains from moonlighting but

are not declared to the HMRC. So, the court ordered the confiscation of the entire £700k, not just the tax owed.

http://www.bailii.org/ew/cases/EWCA/Crim/2011/75.html

By extension, if a BTL landlord build his portfolio through remortgaging etc but did not declare the rental profit,

then the entire sum benefited may well be the entire BTL porftfolio as then the entire BTL income will be 'criminal activiites';.

Pretty sure this will go to the supreme court..

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Basically about a chap moonlighthing where the tax evaded and penalty was proven to be around £5k.

But this guy has £700+k of assets which was purchased using fund he obtains from moonlighting but

are not declared to the HMRC. So, the court ordered the confiscation of the entire £700k, not just the tax owed.

http://www.bailii.org/ew/cases/EWCA/Crim/2011/75.html

By extension, if a BTL landlord build his portfolio through remortgaging etc but did not declare the rental profit,

then the entire sum benefited may well be the entire BTL porftfolio as then the entire BTL income will be 'criminal activiites';.

Pretty sure this will go to the supreme court..

That is very interesting indeed.

Thanks for posting it EBM.

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Its a shame they dont make BTL owners business affairs a public matter.

im pretty sure a good friend of mind isnt declaring his BtL income. But dont know for sure. Id feel a right meanie and probably commit suicide if it turned out all his affairs were in good legal order.

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This case flows from Anti Money Laundering legislation and the Proceeds of Crime Act.

There is a now a thing dividing line between Tax Evasion (Not avoidance, note) being subject to a Civil Penalty and a Criminal Offence.

Same with VAT.

Purposive Tax Evasion (i.e. not genuine mistake or error) of significance (And presently £5k is of significance) means all and any assets gained via Money Laundering automatically qualify as a Crime.

Whilst HMRC could no doubt spend time and investigation, to prove how each property purchased was achieved by undeclared income (Evasion) why bother?

They can (And do) resort to POCA to take the lot, in penalty.

(Because of my professional practice, I am necessarily regulated and compliant to AML and POCA).

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This case flows from Anti Money Laundering legislation and the Proceeds of Crime Act.

There is a now a thing dividing line between Tax Evasion (Not avoidance, note) being subject to a Civil Penalty and a Criminal Offence.

Same with VAT.

Purposive Tax Evasion (i.e. not genuine mistake or error) of significance (And presently £5k is of significance) means all and any assets gained via Money Laundering automatically qualify as a Crime.

Whilst HMRC could no doubt spend time and investigation, to prove how each property purchased was achieved by undeclared income (Evasion) why bother?

They can (And do) resort to POCA to take the lot, in penalty.

(Because of my professional practice, I am necessarily regulated and compliant to AML and POCA).

if the profits are via BTL do they confiscate everything or are you allowed to keep the twigs?

Edited by Tamara De Lempicka

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Good find. It seems he'll get 4 years in the slammer if he fails to pay up. I wonder if the same rule applies to politicians who failed to declare expenses and then used the profits to expand their BTL empires?*

(* yes I know the answer to this, but I can always live in hope)

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if the profits are via BTL do they confiscate everything or are you allowed to keep the twigs?

Up to you to proof which bits are legitimately acquired and which bits are a result of recycling of undeclared BTL profits.

If one does not have records to proof which bits is legtimate, the state will take all.

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Ah yes, seems like a good law to me.

I wonder if they will apply the same reasoning to other people who have made money illegally? After all, the exponential returns you can make through compound interest allow you to make yourself very rich through the profits of relatively small time crime.

And this is the best way to deter crime as well, just seize the assets. Easy to do in this case, as it will be difficult to squirrel that property portfolio outside the country.

Now, how about investigating RBS and HBOS. If there were liar loans at those banks, did the banksters at the top know about it and profit from it?

I think we all know the answer to that question, lets have some equality under the law please.

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(...) After all, the exponential returns you can make through compound interest allow you to make yourself very rich through the profits of relatively small time crime. (...)

Yep.

And in a parallel issue, this is the main advantage of a low tax economy - particularly low taxes on work/jobs/profits. It is better to tax consumptions and capital, particularly rentier classes / less productive capital, such as properties.

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if the profits are via BTL do they confiscate everything or are you allowed to keep the twigs?

list of miscreants' posessions:

(1) BTL portfolio consisting of five apartments

(2) Ikea wardrobes coffee tables and beds, leather-effect sofas

(3) 2 pots of half used off-white paint

(4) 'freshly baked bread' perfume oil

(4) sundry twigs in vases

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if the profits are via BTL do they confiscate everything or are you allowed to keep the twigs?

AML and POCA are hugely swingeing.

In theory, anyone else complicit in this guy's crime (or anyone else's come to that), such as accountant, solicitor, mortgage broker etc, risks a huge fine and the slammer.

This is because anyone in the range of activities regulated by AML and POCA is obligated to report any Suspicion of ML and benefit therefrom: note, suspicion, not absolute certainty.

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Its a shame they dont make BTL owners business affairs a public matter.

im pretty sure a good friend of mind isnt declaring his BtL income. But dont know for sure. Id feel a right meanie and probably commit suicide if it turned out all his affairs were in good legal order.

I,m sure your right about things being made public, eg Benifits is another , if these were made public which they should be "WE PAY" There would be billions saved as people would report crookes who are claiming benifits they are not entitled to.

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Another thought.

Many B2Lers failed to advise their mortgagees the property was to be tenanted from the outset: so they enjoyed a lower interest rate.

Technically, lying on any application for credit is a criminal offence.

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Another thought.

Many B2Lers failed to advise their mortgagees the property was to be tenanted from the outset: so they enjoyed a lower interest rate.

Technically, lying on any application for credit is a criminal offence.

:)

Very interesting.

:D

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yeah a nice vase of twigs would brighten up a dingy prison cell.

They could also put a twig between their teeth instead of biting the pillow. :o

Edited by mikthe20

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Taking this a stage further shouldn't property be seized from people who lied about their income to secure a mortgage? Isn't that property proceeds of a crime?

HMRC could be onto a nice little earner checking every mortgage, firms like these were involved in:

The Financial Services Authority (FSA) has banned five mortgage intermediaries and fined one of them £104,000. This brings the total number of mortgage intermediaries banned since December 2006 to 101.

Most of the individuals have been banned because they are not fit and proper to work in regulated financial services through failings that led to mortgage fraud.

Mark Thorogood trading as Property Park Mortgages, Colwyn Bay, North Wales and Darren Button formerly of Property Park Mortgages, Colwyn Bay, North Wales

Thorogood, the owner of Property Park Mortgages, has been fined £104,294 and banned from working in regulated financial services.

The FSA found that Thorogood had knowingly submitted fraudulent mortgage applications for himself and his wife, inflating his income from £22,950 to £120,000 and her income from £8,832 to £95,000.

In addition, Thorogood submitted two mortgage applications containing fraudulent information on behalf of a family member. In the first application he stated the family member’s income was £85,000 and in the second he stated that it was £130,000; the actual income was £17,610.90.

http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/012.shtml

Better still if the government really wants to help FTBs just send out a new HMRC form with the council tax bill for every house in the country where owners have to detail their mortgage and salaries when they bought. Anyone who couldn't really afford their house has to go. :lol:

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yeah a nice vase of twigs would brighten up a dingy prison cell.

A lick of magnolia paint and some cushions, voilà, worth an extra £10k.

Taking this a stage further shouldn't property be seized from people who lied about their income to secure a mortgage? Isn't that property proceeds of a crime?

Well, that's 25% of the country about to become homeless. ;)

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A lick of magnolia paint and some cushions, voilà, worth an extra £10k.

Well, that's 25% of the country about to become homeless. ;)

why not seize the assets of liar loan fraudsters, and turn them into tenants in their previous homes?

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Taking this a stage further shouldn't property be seized from people who lied about their income to secure a mortgage? Isn't that property proceeds of a crime?

HMRC could be onto a nice little earner checking every mortgage, firms like these were involved in:

Lying on a mortgage application is potentially fraud by false representation i.e. lying with a gain to either yourself or another or exposing the risk of loss to another, or fraud by failing to disclose information, which you are legally required to do so.

Under POCA if a person is convicted of an 'acquisition’ type offence then they can have the proceeds or the benefit of that offence confiscated. This can be either particular criminal conduct or general criminal conduct (criminal lifestyle). The later allows the prosecution to confiscate any property obtained/transferred and any expenditure in the previous six years. It is for the defence to show that the property was obtained/transferred from legitimate sources or any expenditure was for a legitimate purpose. The former allows the prosecution to confiscate the value of the particular conduct.

Any single act of mortgage fraud would almost certainly fall into particular criminal conduct as a single offence committed when the mortgage application was made would generally not trigger criminal lifestyle.

If POCA was used to confiscate a benefit from a single act of mortgage fraud I would be of the opinion that the benefit figure would be the value of the outstanding mortgage – the value of the property.

With the tax evasion analogy made earlier I would be of the same opinion reflected in the case as detailed. As the income from any rent that had not been declared to the HMRC would be illegitimate therefore any assets held by a defendant in such a case, particularly any property held which is being paid for by his illegitimate income would be a criminal benefit and therefore subject to confiscation proceedings.

Edited by Mr. Miyagi

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The punishment seems wholly disproportionate

Seems a damn good idea to me. Why should the punishment be proportionate?

Actually, the social damage done by these fraudsters goes way beyond tax evasion, the whole bubble and its savage consequences is partly at their door.

Scare the holy s..t out of them!

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The punishment seems wholly disproportionate and I would be surprised if it is not overturned on appeal.

Tax evasion should be punished, but the punishment should be fair.

Yes, I'm surprised by the shortsighted f**kwittery predominant in most replies to this thread.

I wonder if the response would be so enthusiastic if HMRC started attempting to apply such draconian penalties to freelance IT bods whose tax affairs aren't perfect.

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Yes, I'm surprised by the shortsighted f**kwittery predominant in most replies to this thread.

I wonder if the response would be so enthusiastic if HMRC started attempting to apply such draconian penalties to freelance IT bods whose tax affairs aren't perfect.

Somehow the government forgot to use POCA against convicted ex MP who fiddled with their expenses...

The law was originally for drug dealers and organised crime. It is obviously being abused now.

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Yes, I'm surprised by the shortsighted f**kwittery predominant in most replies to this thread.

I wonder if the response would be so enthusiastic if HMRC started attempting to apply such draconian penalties to freelance IT bods whose tax affairs aren't perfect.

There is a difference in being disorganised and actively defrauding HMRC of tax revenue and then using the untaxed income to purchase assets which you will benefit from.

If you don't declare income to HMRC then it's your fault if the courts decide to confiscate your assets as a result.

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