Landfill Tax Fraud - Challenging the Allegations

When 14 people were arrested in 2015 over a suspected £78M landfill tax fraud, it put the issue of such taxation in the spotlight. Those arrested will have wondered how best to challenge the views of their accusers.

The landfill tax arrests came during raids as six commercial and eight residential addresses in Gateshead, Washington, Hartlepool, Middlesbrough, Leeds and Hull. They involved HM Revenue and Customs (HMRC), the Environment Agency and the police; with HMRC saying afterwards that they were “the culmination of 18 months' painstaking investigation into the suspected systematic abuse of the landfill tax system”. All the signs are that this was a lengthy and highly coordinated operation. The authorities put plenty of time and effort into it, were careful to choose and monitor their targets and arrested them when the time was right.

So, the authorities would have argued, there could have been little scope for challenging the accusations they are making. But such a claim could not be further from the truth.

HMRC’s Approach to Tax Fraud

The noises coming out of HMRC in recent years have certainly indicated a desire to get tough on business crime.

Tax fraud can only ever be at the top of the HMRC’s agenda. Similarly, the Serious Fraud Office (SFO) has spent much time and effort in recent years declaring that it will come down harder, and with greater regularity, on business crime. It is clear that there is the political will to tackle fraud: the government has made recouping more tax revenue a goal while also indicating that more money can be made available to the SFO (and presumably other enforcement agencies) if it is needed for major investigations.

But, whatever happens, it would be wrong to ever assume that such lengthy, coordinated operations cannot be challenged. The accusers can be beaten with the right approach and shrewd analysis of a case.

Challenging Fraud Allegations

When it comes to such cases, it is important to remember some very important points.

Firstly, the authorities making the allegations are by no means the only experts in their field. They may be in a position to investigate, make allegations and bring prosecutions. But at every stage, the prosecution’s claims can be queried, challenged and taken apart using a combination of legal expertise, specialist knowledge and proactive use of the evidence available.

The issue of environment-related business crime is a relatively new — and growing — area for prosecutions. But this does not mean that the prosecutors are the only ones with the appropriate knowledge. At Rahman Ravelli, we have defended clients where they have been accused of fraud involving mining, carbon credits, environmental investment schemes and a wide variety of other environment and business issues. In each case, there has been scope to diminish the claims made by the prosecution; either on points of law or on issues surrounding the evidence. It is important to remember that the authorities will not always be sure of themselves in such prosecutions.

A second point worth remembering is that even if the authorities in such a case are sure of themselves, they may well proceed inappropriately. It is not unheard of for prosecutors in environment-related business crime cases to “jump the gun”. They either make arrests before any supposed crime has been committed or charge people before they have had a proper chance to assess the evidence — or what they believe is the evidence — which they have accumulated. Either scenario gives a defence team plenty of opportunities to pick holes in the allegations.

When it comes to fraud cases, the defence will always look for the weak points of a prosecution case: if you find these and exploit them, even the strongest-looking allegations can collapse. At Rahman Ravelli, we successfully represented many major SFO and tax fraud cases.

Taking Legal Advice

The SFO often announces its ambition to have more prosecutions. And when the SFO makes such regular and bold pronouncements those in business have to realise that they must have their house in order if they are to ensure they are not the ones on the list of prosecutions. We regularly advise companies and organisations in all business sectors on how to stay within the law.

For many companies, specialist legal expertise is needed to make sure that this is the case. Many companies have in-house solicitors who carry out a useful role in overseeing the day-to-day functioning of the operation. But only a solicitor working in the field of business crime can prepare a company if and when the authorities start to make accusations such as multi-million pound landfill tax fraud. Many enforcement agencies have gained new powers in recent years.

Recent legislation has targeted business crime, new enforcement agencies have been created and there is greater cooperation between them. In such a rapidly developing legal landscape, it is foolish not to make sure your business is doing everything it needs to in order to stay on the right side of the law. And if you do find yourself under investigation, remember that the right legal advice can challenge the allegations being made against you.