£39m collected through confiscation notices

HMRC has confiscated assets worth almost £39m through forfeiture notices in 2021-22 which is a £35m increase from the £4.8m collected the year before

The data, collected by law firm RPC through a Freedom of Information (FOI) request, show that in the last year the amount collected has increased by 712% with HMRC handing out 77 forfeiture notices in the 2021-22 tax year, which is down from 102 in 2020-21.

The amount that HMRC froze has remained at a similar level with £35m worth of assets frozen in the 2021-22 through 82 freezing notices and £34m the year before through a significantly higher 229 notices.

Since the introduction of account freezing orders and account forfeiture orders in January 2018, HMRC has frozen £102m worth of assets after giving out 572 freezing orders and has confiscated over £49m through 262 forfeiture notices.

In the first four months of 2018, HMRC only issued one freezing notice for £200,000 but increased their use significantly in the next tax year giving out 78 which froze over £9m worth of assets with £1m seized through 14 forfeiture notices.

Account freezing orders and account forfeiture orders are deployed where there is a reasonable suspicion funds were gained through criminal conduct with RPC stating that the increase in the amount seized through forfeiture notices was down to HMRC’s crackdown on furlough fraud.

Adam Craggs, partner and head of contentious tax and financial crime, RPC said: ‘The relative ease with which UK law enforcement bodies can seek and obtain an account freezing order or an account forfeiture order, means that they are being used more by HMRC. The threshold for obtaining an account freezing order is suspicion based and therefore low – there is no need for there to have been an associated criminal conviction or even an investigation.

‘The sharp rise in assets forfeited in the last year suggests that HMRC consider these orders to be the ‘go-to’ option when seeking to deprive someone suspected of wrong-doing of their ill-gotten gains.’

RPC added that HMRC is willing to use the orders in a far wider range of cases than might be expected which includes company directors suspected of falsifying company records and accounts, or if a fraudulent claim for principle private residence relief (PPR) is suspected to have been made.

Alice Kemp, senior associate, RPC, said: ‘Given the success HMRC is now seeing with account forfeiture orders, it is likely that they will be used more and more. An account forfeiture order can be challenged by any affected person. It is possible to either resist an application or to have an order set aside or varied.’

Accountancy Daily