Don't Mess With Taxes

Paul Baxendale-Walker, a former tax advisor and attorney, or solicitor as the profession is known in the United Kingdom, has had his share of run-ins with British officials.

Most recently, Baxendale-Walker was facing a £14 million penalty ($17.7 million U.S.) sought by His Majesty's Revenue & Customs, or HMRC, the British version of our Internal Revenue Service. HMRC filings against the Baxendale-Walker estimate his schemes have cost the exchequer some £1 billion ($1.27 billion U.S.) in lost taxes.

Now, however, Baxendale-Walker is off the hook for the fine.

But what's probably more frustrating for U.K. tax officials that losing out on the millions in penalties is the fact that the money slipped through the agency's hands due to a “rudimentary” error made by HMRC, according to tax tribunal documents reviewed and reported on by The Bureau of Investigative Journalism (TBIJ).

Baxendale-Walker says it doesn't matter what mistakes HMRC might have made, its charges stemmed from  a “false collection of allegations” and the penalty was “a fiction … conjured” by HMRC.

Costly missed deadlines: The penalty dismissal actually happened on July 28, 2023, according to TBIJ, but the document detailing the judge's striking down the proposed £14 million fine was not make public until this month.

The nonprofit investigative journalism organization said that HMRC was attempting to assess the penalty based on Baxendale-Walker's refusal in 2022 to hand over documents to the tax authority.

HMRC agreed to an extension requested by Baxendale-Walker, but in doing so made one of two mistakes, both of which involved missing a deadline for imposing a penalty, according to the TBIJ story.

The Upper Tribunal judge found that it did not matter which mistake HMRC had made, it had invalidated the £14 million penalty regardless.

“This is screwing it up 101,” Ray McCann, the former president of the Chartered Institute of Taxation and a senior HMRC investigator of more than 30 years, told TBIJ. “I’m completely mystified as to why [HMRC] did what they did [... it appears] there’s a lack of battlefield command within HMRC.”

The assessment of Dan Neidle, the founder of the independent thinktank Tax Policy Associates and former head of tax at global law firm Clifford Chance, was harsher.

“If HMRC can’t get this guy, it’s hard to see how they can get anyone,” said Neidle, referring to Baxendale-Walker's long history of civil and criminal allegations of tax fraud and forgery. Baxendale-Walker pleaded guilty in 2016 to one forgery count.

Baxendale-Walker was disbarred in 2007 on the grounds that he had a conflict of interest in advising his wealthy clients on his own tax schemes, which were later found to be illegal. The most infamous one involved the Scottish football club Rangers.

He subsequently became a talk show host and then an adult film producer, director, and actor. Following a filing by a creditor, Baxendale-Walker was declared bankrupt in the British High Court in July 2018.

Tax Felon Friday: The missed British tax penalty underscores the need for all involved in tax matters to know and judiciously follow the applicable laws.

It’s also a good reminder that if you ever face any tax allegations, your first step should be to hire a reputable attorney with experience in your area of tax trouble. That way, you should avoid becoming the subject of the ol’ blog’s weekly Tax Felon Friday feature. 😉

If you want to catch up on tax miscreants who have been charged and/or convicted, a good place to start is the special Tax Felon Friday page.

You also can find tax crime posts, notably those that were published long before I gave them a special end-of-week feature moniker, in where else, the ol’ blog’s tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.

You also might find these items of interest:

• 'Tax' typo in $2 taxi fare dispute leads to 2 nights in jail
• Acclaimed Swedish crime writer gets jail time for tax evasion
• Swiss banker wanted in U.S. tax evasion cases escapes IRS clutches

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