JULY 2013
PART 6
REVENUE FUNCTIONS
9A.148 Taxation referrals to SOCA
PoCA02 gave powers to SOCA (see paragraph 9A.8) to collect specific or general taxes where a company or person is suspected of having income, gains or profits from the proceeds of crime [note 1]. SOCA can take over the tax collection function from HMRC by serving notice on them specifying the company or person, and period for which the revenue function will be carried out [note 2]. There is no need for an application to court.
SOCA may use tax assessments as an alternative to removing property from someone suspected of crime, where they have not been able to remove property through confiscation (see Part 3) or civil recovery (see Part 4). It allows for the taxation of income with no apparent legitimate source.
9A.149 Types of tax SOCA may serve notice to collect
SOCA may serve notice on HMRC for the following revenue functions to be vested in them [note 3]:
9A.150 Reasonable grounds for suspicion
SOCA must have reasonable grounds to suspect that taxable income, gains or profits are the proceeds of crime. It is irrelevant whether that company or person has been acquitted in a prosecution of the suspected conduct. It is not necessary for SOCA to identify the source of the income for a tax assessment to be raised [note 4].
9A.151 Action to be taken where tax assessment raised prior to making of insolvency order
Where a tax assessment has been raised by SOCA prior to an insolvency order, then unless the company or bankrupt has already paid that assessment, it will be a provable debt in the insolvency proceedings, see Chapter 77.
9A.152 Action to be taken where tax assessment raised following the making of an insolvency order
Where a tax assessment is raised by SOCA after the making of an insolvency order, then the debt will be a provable debt in the insolvency proceedings where the liability was incurred (i.e. the taxable income was earned or capital gained) prior to the making of the winding-up order or bankruptcy order (see paragraph 40.9).
In bankruptcy, if the liability was incurred after the date of the bankruptcy order the debt is not a bankruptcy debt and the bankrupt will remain liable for its payment post discharge from bankruptcy. However, assets vested in the trustee may not be seized in payment of the taxation.
The official receiver should notify SOCA of the insolvency order and the position regarding the debt.
[Back to Part 5 – Cash seizure and forfeiture] [On to Part 7 – Forfeiture and restraint orders under the Terrorism Act 2000]