HMRC's 'pay now enquire later' policy enabled fraudulent claim

The taxpayer was an electrician working on offshore oil and gas rigs. He asked his accountant to file his tax return to claim employment expenses.

Unknown to the taxpayer Capital Allowances Consultants Ltd submitted his returns for 2015-16 and 2016-17 in which they included claims for enterprise investment scheme (EIS) relief.

HMRC's made the repayments to Capital without checking their validity. Capital received them into a bank account under its exclusive control and paid 30% to the taxpayer.

In 2018 suspecting fraud HMRC opened an enquiry and issued discovery assessments to recover the relief.

The taxpayer called HMRC within 30 days of receiving the assessments but was directed to HMRC's website and told to call the helpline. 

The taxpayer then obtained more work on offshore rigs. In the meantime HMRC received information suggesting that linked agents had submitted incorrect EIS claims.

In December 2019 that the taxpayer and nine...