HM Revenue and Customs (HMRC) has launched a task force to crack down on tax dodgers in the legal profession as another barrister faces VAT fraud charges.
But the deliberate targeting of the bar has shocked and angered the Bar Council, who claim HMRC has not communicated with them.
Criminal barrister Edward Agbaje of 1 Gray’s Inn Square appeared at the Old Bailey yesterday, charged with two counts of cheating the public purse.
Agbaje is accused of failing to declare taxable income to HMRC from his profession as a barrister between 31 December 2008 and 31 December 2010, and failing to account for amounts of VAT payable between 2 February 2005 and 17 March 2012.
Agbaje pleaded not guilty at the case management hearing of defrauding the taxman out of £81,000, and will face trial in January 2013. He is being represented by Nicholas Fooks of 5 Paper Buildings.
1 Gray’s Inn Square senior clerk Matthew Wildish said: “Edward Agbaje has been suspended pending the outcome of proceedings.”
Prosecuting is Andrew Marshall, of 18 Red Lion Court, instructed by HMRC assistant director John Pointing, who revealed last month that he has a series of these cases “in the pipeline” (28 August 2012).
Former 39 Essex Street silk Rohan Pershad QC is also awaiting trial on a £600,000 VAT fraud charge (2 August 2012).
HMRC has launched the task force to target the legal profession in London, in response to specific intelligence. A specialist team has been allocated to pursue the capital’s tax dodging lawyers. HMRC officers will be swooping on suspects and examining their records.
However Bar Council chairman Michael Todd QC responded: “We do not comment on the tax arrangements of individual barristers, for which they are personally responsible. The Bar Council expects barristers, like any other group of taxpayers, to meet their tax obligations.
“It is not, at present, clear to us exactly why the legal profession has been targeted by HMRC. Barristers provide an essential, front-line public service which is crucial to the smooth running of our country’s excellent and world-renowned justice system. The law is one of the UK’s strongest exports, and barristers and solicitors bring billions in revenue to the UK every year.
“My predecessor, Peter Lodder QC, wrote to David Gauke MP last December, to invite him to discuss barristers’ liability to pay taxes for work which has been done, but for which the fees had not been paid by the Government. He declined to meet us, and we were unaware, until yesterday, that HMRC had specific concerns about the tax affairs of lawyers.
“We are concerned that HMRC has chosen to proceed in this manner, rather than using the channels of communication with the relevant professional bodies, which have always been open. In future, we would welcome a greater level of engagement with HMRC, so that we can better assist it in carrying out its duties to the public.”
Mike Eland, general enforcement and compliance director at HMRC, said: “These task forces bring together specialists from across HMRC to find people who are not paying what they should. If you have paid all your taxes you have nothing to worry about. But for those deliberately evading tax, be warned that HMRC is coming after you. This is not an empty threat – HMRC can and will track you down if you choose to break the rules. We are on target to collect more than £50m as a result of taskforces launched in 2011-12.”
David Gauke, the Exchequer Secretary, said: “We have made it clear that we will not tolerate tax evasion and we are determined to crack down on the minority who choose to break the rules. Everyone needs to pay the taxes they owe in full. It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should.”
It is part of a nationwide operation by HMRC which is looking to recover a total of £19.5m from a number of trades, including grocery and retail in Wales, the North West and South West, hair and beauty in the North East, restaurants in the South East and Solent, and the Scottish motor trade.