Examples of the tactics used

What follows is a resume of some of methods typically adopted by tax evaders. 

Moonlighting

Tax evasion at its simplest level merely involves staying out of the tax system altogether. The incidence of moonlighting in the building industry during the days of the "lump" led directly to the introduction of the Construction Industry Tax Deduction Scheme.

During the mid 1980’s the Revenue deployed small teams of volunteer officers to carry out surveillance to track down moonlighters, initially in Blackpool. Early success was followed up by the deployment of Schedule D compliance officers in virtually every tax office.

Revenue Investigation Officers (previously known as Schedule D compliance officers or 'Ghostbusters') routinely scan advertisements in local newspapers or shop windows and even before the advent of the modern personal computer they frequently had access to reverse telephone directories to track down moonlighters from bare telephone number details.

Non Extractive Fraud

This involves profit switches or timing differences, for example:

• Post dating Receipts
• Ante dating Expenditure
• Hidden Reserves
• Bed & Breakfasting Loan Accounts
• Stock manipulation

Perhaps the most common place method seen in practice is the manipulation of stock to produce the desired "profit".  It is not unknown for the evaders' Accountant to be  involved - putting at risk livelihood and, if the amount involved is significant, personal liberty!  The most blatant case of this kind we came across was where the Accountant virtually treated this as year end tax planning.  Based upon the formal disclosures made by the evader under the Hansard procedure to the Inland Revenue (in which he implicated the Accountant and in connection with an account in a false name also his Bank Manager), the following scene can be recreated:

"Studying the draft accounts the Accountant did a quick calculation to work out what range of figures could be used for closing stock in hand without giving rise to suspicion.  He then apparently discussed with the client the impact on net profit of reducing Closing Stock.  Arrangements were then made for the audit to take place and in the meantime some stock was moved off site!"

The Accountant and Bank Manager who assisted the evader are both guilty of conspiracy to defraud - it matters not that they made no financial gain themselves.    

Extractive Fraud