Hong Kong s Judiciary Procedures

Transcription

1 Hong Kong s Judiciary Procedures Prosecution for Tax Offences 5 September, 2012 Inland Revenue Department Hong Kong SAR Preliminary Assessment Prosecution potential Available facts Intelligence Search warrant 1

2 Case Suitable for Prosecution Relevant documents (originals) Ledgers Fictitious purchase invoices Original sales invoices Tenancy agreements Land Office reports Rental receipts Case Suitable for Prosecution (2) Witness statements Case officers Third parties, e.g. tenants Cautioned statement from Suspect 2

3 Case Suitable For Prosecution (3) Prosecution Report (to Department of Justice) All gathered evidence IRD s opinion Rebuttal to possible defense by Suspect Commissioner s Sanction Department of Justice confirms there is a case for prosecution Obtain sanction from Commissioner to proceed with prosecution Tax Inspector lays charges against the Suspect 3

4 Exhibit List Witness List Documents required Banker s affirmation List of unused documents Summary of Facts Then pass copies of above documents to Suspect asap Trial Pleads guilty end of case, pending sentencing Pleads not guilty Pre-trial review Actual trial 4

5 Handling seized computers Only computer expert (available in-house) can retrieve files from seized computers Follow standard procedures in using computer forensic tools Seized computers and documents under lock and key Detailed log for access Expert prepares report to court Statutory Provisions Inland Revenue Ordinance Section 80 any person, without reasonable excuse, files an incorrect return or fails to comply with certain obligations, commits an offence Maximum penalty: fine of $10,000 (US$1,280) + fine of treble tax undercharged 5

6 Statutory Provisions (2) Inland Revenue Ordinance Section 82 any person, who wilfully with intent to evade tax, omits anything in the tax return or makes any false claims or false statement to evade tax or assists any other person to evade tax, commits an offence Maximum penalty: fine of $50,000 (US$6,400) + fine of treble tax undercharged + imprisonment for 3 years Statutory Provisions (3) Inland Revenue Ordinance Which section to use, section 80 or section 82? Merits of the case Amount of tax involved Quality of evidence available Seek advice from Department of Justice 6

7 Prosecution Cases Section 80 Case 1 An individual who is an employee Claimed dependent parent allowances in 2003/04 and 2004/05 tax returns Dependant already passed away in year 2002 Convicted and fined Prosecution Cases Section 80 Case 2 An employer failed to notify IRD of the cessation of employment of an employee IRD failed to recover salaries tax from the employee Employer convicted and fined 7

8 Prosecution Cases Section 82 Case 1 An individual who is an employee of a bank Owned a property and let for rental income Failed to declare rental income in her tax returns Falsely claimed home loan interest deductions in her tax returns Prosecuted for 10 counts of wilfully with intent to evade tax by completing false returns Convicted and sentenced to 4 months imprisonment suspended for 18 months + fine Prosecution Cases Section 82 Case 2 Taxpayer is director and shareholder of a company Company kept 2 sets of accounting records Company issued 2 types of cash sales invoices (prefixed and non-prefixed); the latter type not recorded in the books Omitted receipts deposited into taxpayer s joint account and shared with another director Prosecuted on 5 counts of wilfully with intent to evade tax Convicted and sentenced to 9 months imprisonment + fine of 2 times 8

9 Prosecution Cases Section 82 Case 3 Taxpayer claimed deductions for charitable donations in total amount of $400,000 (US$51,300) for 5 years He only made 2 donations of $100 (US$13) each in these 5 years Convicted and sentenced to 240 hours of community services, after having been remanded for 14 days. Prosecution Cases Section 82 Case 4 Taxpayer was team leader of the marketing department of a finance group Led a team of over 100 subordinate accounts executives Attributed part of his own commissions to subordinates, instructed them to cash them and deposit these to his joint account Only reported income received directly from his employer Convicted and sentenced to 6 months imprisonment + fine of 2 times 9

10 Failed Prosecution Case Transfer of concealed profits to an BVI company Taxpayer s accountants gave witness, but described by court as not credible witnesses IRD s case lost Judge remarked there was no doubt that there was omission of profits Prosecution could not prove beyond reasonable doubt that the taxpayer had a wilful intent to evade tax Thank You 10