Noticeable Increase in the use of NCA Powers to Recover Tax

In addition to UWOs and AFOs, the NCA has in its armoury a procedure for collecting taxes under the provisions of Part 6 of the Proceeds of Crime Act 2002.

If the qualifying conditions set out In S.317 of Proceeds of Crime Act 2002 are met the NCA will step into the shoes of HMRC (following the service of notice on HMRC to vest such powers in the NCA) to adopt its general revenue functions and seek to recover taxes. These conditions will be met where the NCA has reasonable grounds to suspect that:

•               undisclosed income, profits or gains have arisen or accrued in a chargeable period; and,

•                the income, profits or gains are chargeable to income tax or capital gains tax; and,

•               All or part of the income, profits or gains have arisen or accrued (directly or indirectly) as a result of criminal conduct (including the conduct of a third party).

If the NCA are satisfied that the qualifying conditions have been met, then notice is sent to the individual tax payer (R) to commence the process.

The NCA’s letter will:

(1) notify R of its decision to adopt the general revenue functions of HMRC in respect for example of R’s Income Tax and/or Capital Gains Tax liabilities and Class 4 National Insurance Contributions in relation to the stated years.

(2) advise R that the NCA will be responsible for assessing and recovering Income Tax, Capital Gains Tax and Class 4 National Insurance contributions owed in relation to the years stated.

(3) Inform R that interest is due upon any unpaid Income Tax, Capital Gains Tax and Class 4 National Insurance contributions owed In relation to the years stated and will continue to accrue.

(4) Inform R that he may be liable for penalties of up to 100 % of the Income Tax, Capital Gains Tax and Class 4 National Insurance contributions owed in relation to the stated years.

This will be a challenge for R to respond to – particularly when the burden is on R to disprove allegations implying criminality.  

We can expect, just like account freezing order applications, a rise in these types of proceedings by the NCA.

Barry Stancombe
33 Chancery Lane