Crime

HMRC ramps up use of new AFOs and FOs, RPC finds

HM Revenue and Customs (HMRC) has “ramped up” its use of new Account Freezing Orders (AFOs) and Forfeiture Orders (FOs) to tackle suspected criminal behaviour, According to law firm RPC.

The firm said that 166 orders to freeze accounts were issued by HMRC in 2019/20, up 177% from 60 the previous year. In addition, the total amount forfeited, and the number of forfeiture applications also increased fourfold from the previous year.

Since January 2018, when AFOs and FOs were introduced into the Proceeds of Crime Act 2002 (POCA), regulatory bodies, including HMRC, have had the power to apply for AFOs to prevent money being withdrawn from or deposited into accounts linked to suspected criminal activity.

FOs (issued by the Magistrates’ Court) and Forfeiture Notices (issued by Regulatory bodies, including HMRC) are used to directly seize money that is suspected of having been obtained by unlawful conduct. Prior to these powers coming into effect, HMRC, and other regulatory bodies, had few options available to it for seizing money directly from bank accounts without first having to charge the person suspected of wrongdoing.

This allows HMRC to apply to the court to freeze and forfeit bank accounts without having to bring an allegation of criminal wrongdoing to trial.

RPC also said that it expects AFOs and FOs to be used by HMRC to seize money in accounts of suspected fraudsters relating to the Government’s £350bn coronavirus stimulus package. Businesses suspected of abusing the Coronavirus Job Retention Scheme could have accounts frozen for up to two years.

It added that AFOs can be used for amounts as low as £1,000 and whilst Unexplained Wealth Orders can be used to compel suspected criminals to reveal the source of their wealth, they require at least £50,000 to be in question.

Adam Craggs, partner and head of Tax Disputes at RPC, said: “HMRC now has extensive powers to seize assets under investigation and it appears to be looking at every opportunity to exercise those powers.

“Freezing Orders are easy to obtain. The authorities only need to show the Magistrate that they have reasonable grounds to suspect that money has been obtained by unlawful conduct.”

Michelle Sloane, partner at RPC, added: “The Revenue may well issue freezing and forfeiture orders to businesses and individuals suspected of dishonestly abusing the coronavirus stimulus package, including the ‘furlough’ scheme.
“With such large sums of money potentially at risk, HMRC will want to do everything it can to make sure that any money wrongfully claimed is returned to the Government.”

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