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With power comes great responsibility
Money laundering to fund international terrorism is an outrage and it is entirely right that HMRC should be given powers to prevent it. But with power comes responsibility and a recent case, Brac Saajan Exchange Ltd and others (TC8505), shows what happens when this balance is ignored. It is necessary to read the whole case to get a full picture of what went on but, essentially, HMRC closed down a business and imposed lifetime bans on its managers for what, when all of the evidence was actually reviewed, turned out to be minor errors, most of which had already been corrected.
This was no fly-by-night business. It had 80,000 customers, 62 employees, spent more than 10% of its annual expenditure on compliance activities and was advised on risk issues by respected international firms. The officer making the decisions did not visit the company and did not see the company’s risk management system in operation. The spreadsheets on which HMRC relied had errors and HMRC had to withdraw them during the hearing. I could go on.
In Judge Redston’s words, none of the breaches came anywhere close to justifying the cancellation of registration.
HMRC has a hard job. I never want to criticise individual officers and won’t here. But what greatly concerns me is that there seems to have been no proper review of how the investigation was being conducted. Surely decisions to close down businesses or impose lifetime bans should be made only at the highest level after a thorough internal review.
Do read the case: it is long but it does show what can happen when there is no proper system of checks and balances. I think all of our readers, including our large readership in HMRC, will find what happened quite astonishing.
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