Spear's Wealth Management Survey

The Dog Ate Your Assets? HMRC Will Find That Hard to Believe

Legal Aide, Wednesday, 30th January 2013

Property tycoon Scot Young has been jailed following a contempt of court judgement after his ex-wife's claim he did not disclose £400 million that should have been declared as part of their settlement. Young (pictured below) claimed the funds were lost in a Moscow property deal that went wrong.

I am sure I am not the only one, who when called upon in a crisis, can instantly locate:
 
- my elder daughter's gum shield in the three seconds before the coach leaves for national finals;
- my younger son's school shoe removed from the door step where it was carelessly left on atmospheric re-entry from a hard day at school and re-positioned by the family canine;
- my significant other's vitally important draft board paper;
- and all sorts of similar things.

But how is it that whenever I look for my keys/purse/mobile phone, the said item is never where I left it or has been moved by said elder daughter/younger son/significant other or eaten by the family canine?

I suspect that HMRC or indeed perhaps divorce lawyers often come across the same issues: one person always knows where the missing item is, but it is seldom the person who has mislaid it.  

Read more: HMRC coming after cash stashed in Switzerland

So in the absence of an omniscient but forgetful mother, just how difficult is it to lose or mislay one's possessions - a bank account or an entire house - without someone finding them?
 
To the layman, the obvious panacea might be the ubiquitous 'offshore trust' - always located in some exotic far-off tax haven, where the 'loser' (and in the context of one who intentionally places his assets beyond the reach of his creditors/about-to-be former spouse/tax authorities I use the term in more than one sense of the word) has no beneficial interest in the assets subject to the trust.

This means, fortunately for him, despite the loss, that these assets cannot be taken into consideration when totting up annual income or total wealth or assets available on divorce, so the 'fair and reasonable' amount of tax to be paid to HMRC or shared with the nearly-former spouse is magically, tragically reduced.
 
If only life were that simple. HMRC has a wide range of powers it can call upon, depending on what is being sought and why, to ascertain the amount of tax due and then to collect and, if necessary, enforce payment and similarly a broad range of measures it can take when tax fraud is suspected.

Read more: Husband jailed for not disclosing assets

These abilities include search and seizure warrants and powers of arrest, not to mention the court's sanctions if the (non)taxpayer is found guilty, including spending time at Her Majesty's pleasure, a fate which can befall others who are unable to provide the court with an adequate explanation of the circumstance surrounding their loss.

Colleagues who practise family law have access to a similar armoury, albeit with different tactics and method of approach, as has been widely reported recently in the case of Scot Young. The end result is the same however: disclosure, then payment.

Sophie Mazzier is counsel at Maurice Turnor Gardner

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