HMRC and Unexplained Wealth Orders (‘UWO’S)

Back in January 2018, new regulations were implemented by HMRC requiring individuals to explain how they have acquired property or assets where the owner does not appear to have enough income or earnings to make such purchases.  

These regulations called Unexplained Wealth Orders (‘UWOs’) provides HMRC with the ability to confiscate assets in circumstances where individuals cannot explain their source of income.

Originally, this regulation was implemented to try and combat foreign oligarchs suspected of corruption.  HMRC are be able to apply to ‘freeze’ and ‘forfeit’ funds in bank accounts of individuals suspected of being involved in serious crime. These powers are outlined in the Criminal Finances Act 2017 and can be enforced by HMRC as well as the Serious Fraud Office, the National Crime Agency and other designated agencies.

How is a ‘UWO’ obtained?

In order for HMRC or the Serious Fraud Squad to obtain a ‘UWO’, they must apply to the High Court providing satisfactory evidence that the suspected individual holds assets or property worth more than £50,000. Many concerns have been raised that the sum of £50,000 is relatively small, but the view is that this amount has been set to ensure that HMRC aren’t restricted when carrying out their investigations.

In order for a ‘UWO’ to be issued to an individual, the judge must be satisfied that the person is ‘politically exposed’ , or there are reasonable grounds for suspecting that they (or a person connected with them) have been involved in serious crime, including tax evasion.

The ‘UWO’s do not require any criminal conviction which means that HMRC can apply for this type of order based only on their suspicions as to the taxpayer’s position, or if an individual who may be a politically exposed person (‘PEP’- someone who has been entrusted with a prominent public function) will especially be a target for the use of these new orders. This means that HMRC can make an order against a ‘PEP’ even if there is no suspicion that they are involved in any criminal activity.

Upon the ‘UWO’ been granted, HMRC are then able to apply for an interim freezing order preventing the asset from being sold or transferred (meaning that the asset cannot be disposed of before a response is provided). Implemented from 16^th April 2018, the new powers were heightened meaning HMRC can now search, seize and detain any forms of cash which includes betting receipts, casino tokens and gaming vouchers. In addition, any specific items of valuable jewellery, precious metal or stones can also be seized.

HMRC also have the power to forfeit cash, including monies held in bank and building society accounts without the need for a court order.

Conclusion

As HMRC have now secured several ‘UWO’s against PEP’s, there are raised concerns that ‘UWO’s may be used by HMRC as a tool towards supporting general tax investigations and enquiries.  

Next Step

If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.