In Gary John Robb v National Crime Agency  TC 05374 the First Tier Tribunal (FTT) upheld tax and penalty assessments made by the Serious Organised Crime Agency (SOCA) in targeting a known criminal.
Under the Proceeds of Crime Act 2002 SOCA can assume HMRC’s functions in relation to income tax and NICs where they have reasonable grounds to suspect that a person is liable to tax on income which has arisen directly or indirectly from criminal conduct.
- The taxpayer had been charged with drug offences, had absconded from his trial to North Cyprus, where he lived for 12 years before being jailed in the UK and then extradited back to North Cyprus for imprisonment on fraud charges.
- SOCA were successful in recovering £1.5m in connection with his fraudulent property dealings in North Cyprus.
- They also assessed him for income tax, NICs and penalties for failure to notify for several years based on his statements to them.
The taxpayer appealed the assessments and was unale to provide any evidence to disturb the assessments. The FTT found that:
- SOCA were entitled to make the tax assessments and these were valid and reasonable.
- The penalties were valid and not excessive.
The taxpayer’s appeal was therefore dismissed.
It is relatively rare to see a case where SOCA have exercised their powers to assume HMRC's repsonsibilities.
In an accompanying press release the National Crime Agency stated that:
“The NCA is tenacious in using every legal avenue available to hit crooks where it hurts. In this case we have used our unique tax powers under part six of the Proceeds of Crime Act to pursue Robb for his profits. It might seem unusual that a drug dealer can be penalised for not paying tax and interest on his earnings but this is a powerful and important tool to reduce the funds which can otherwise be diverted into supporting further criminality.”
Case reference: Gary John Robb v National Crime Agency  TC 05374