Freezing the assets of an individual or company through an unexplained wealth order (UWO) can have a devastating impact, prompting lawyers from Irwin Mitchell Private Wealth to question if UK agencies are experienced enough to handle them.
Introduced on 31 January 2018, anyone who receives a UWO must explain how they obtained any asset(s) in question.
Despite early reassurance from the UK Government that it was unlikely they were be used in the first year, the first orders were issued a month later.
UWOs can be requested by HM Revenue & Customs and other relevant enforcement bodies, including the National Crime Agency (NCA).
Normal international wealth planning
Nick Rucker, partner at Irwin Mitchell Private Wealth, told International Adviser that the firm has, so far, only dealt with one UWO, during which it was asked to explain what a trust was.
He said it was very concerning “dealing with a crime agency that doesn’t know what looks normal in international wealth planning”.
His colleague, Alex Ruffel, highlighted the serious implications that such orders can have.
“Assets can be frozen for a long time and possibly destroy companies,” said the partner in the private wealth tax, trusts and estates team.
“You can be accused of a crime, spend a couple of years in hell and be acquitted in the end. There’s not a lot of balance.”
State-sponsored blackmail
The sweeping power of UWOs can be compared with accelerated payment notices (APNs), a controversial tool that allows HMRC to demand full, upfront payment of disputed tax within 90 days.
There is no right to appeal.
Ruffel described APNs as “a form of blackmail” and said she was “uncomfortable” about their use “for legal and ethical reasons”.
“It’s also expensive for people to fight their cases.”
HMRC collected more than £4bn ($5.1bn, €4.47bn) between 2014, when they were first introduced, and April 2017.
Since 2014, more than 80,000 APNs have been issued. In April 2018, it was revealed that HMRC had withdrawn 6,000 of them.
Making mistakes
As highlighted by the APN withdrawals, government agencies can make mistakes.
UWOs were only introduced in January and, after the first ones were announced in March, no further information has been released about how many have been issued.
The potential fallout from being issued with a UWO is far greater than for an APN.
Whether the question from the investigator about “what’s a trust?” was an anomaly or indicative of deeper training issues, it won’t have done much to fill those on the receiving end of that particular UWO with much confidence.
