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  • Tax &Terrorism: Red Faces At The Revenue Over Bin Laden Revelations

    9 April 2019

    Andy Wood

    Every so often, a news story surfaces which almost beggars belief.

    Such a report emerged in the Sunday Times last week, detailing how gangsters across Britain stole billions of pounds in a series of VAT, benefit, mortgage and credit card frauds.

    Eight billion pounds is believed to be have been filched from the public purse alone with police and the intelligence services convinced that those behind the crimes sent tens of millions of pounds to fund terrorist groups in the Middle East.

    In fact, some of the cash is believed to have ended up in the compound in Pakistan where Osama bin Laden, the leader of al-Qaeda, lived out his remaining years before being killed by US Navy Seals in 2011.

    Whilst I thought all that was truly startling, one remaining detail stood out.

    The Sunday Times alleges that despite HMRC being made aware of the gang’s activities by its own intelligence officers, it prevented crucial information from being passed to MI5 because it was “worried about preserving the taxpayer confidentiality of the terror suspects”.

    It was only after some of those involved were shown to be connected to one of the suicide bombers who launched a series of attacks in London in July 2005 which left 52 people dead that the Revenue agreed to share what it knew.

    Meg Hillier MP, who chairs the Commons’ Public Accounts Committee, has quite understandably described the oversight as “extraordinary”.

    I agree entirely and not just because what has been reported is mind-boggling.

    HMRC is entrusted with a key role in the UK’s efforts to thwart money laundering and counter terrorist financing.

    Those efforts were lauded in a report published by the inter-governmental Financial Task Force organisation only last December.

    It noted that the UK’s programmes were “well-developed and robust” and “highly effective in investigating, prosecuting and convicting a range of terrorist financing activity”.

    Part of that infrastructure involves HMRC acting as an anti-money laundering supervisory body for certain professionals (Source).

    Subscribing to the process isn’t free. The Revenue demands separate fees when you apply to register for supervision, for each premises you wish to be covered by the procedures, subjecting oneself to a ‘fit and proper’ test if you work in what’s classed as a “money service business” and renewing your registration every year.

    HMRC has also boasted of the capabilities of its Connect system, a so-called ‘snooper computer’ which cost in the order of £100 million to develop and is able to draw information about individual taxpayers from a variety of sources to determine whether they’re paying the right amounts in tax.

    It is also only right, of course, that the Revenue does manage our personal details properly. “We treat the security of your data very seriously”, it insists (Source).

    Nevertheless, as Meg Hillier has pointed out, most of us would expect HMRC to share details with other appropriate agencies if someone’s not only evading tax but seeking to do harm.

    All in all, these latest revelations are a grave denting of the Revenue’s crime-busting credentials, even in an age when it seems to face perpetual criticism over its handling of the introduction of a loan charge, its extension of time limits for investigating offshore income or the confusion of its pursuit of those possible breaching IR35 rules.

    Declaring the efficiency of its people and processes is all very fine but to do so and then be found responsible for serious errors of judgement of the sort uncovered by the Sunday Times amounts to nothing more than arrogance or hubris.

    If you have any queries about this article or tax in general then please do get in touch.