HM Revenue and Customs (HMRC) has ramped up its use of account freezing orders (AFOs) and forfeiture orders (FOs) to tackle suspected criminal behaviour, according to a freedom of information request by law firm RPC.
The FOI said that 166 orders to freeze accounts were issued by HMRC in 2019/20, which is up 177% from 60 orders the previous financial year.
The total sum frozen rose to £19.49m ($23.86m, €21.69m) from £7.93m in 2018/19.
The number of account forfeiture orders increased 379% to 67 from 14 a year before.
Some £4.75m was forfeited in 2019/20.
| Year | No. of account freezing orders | Amount frozen | No. of account forfeiture orders | Amount forfeited |
| 2018/19 | 60 | £7,925,895 | 14 | £1,159,827 |
| 2019/20* | 166 | £19,487,281 | 67 | £4,751,319 |
Source: HMRC (*Figures up until 25 March 2020)
Coronavirus
“HMRC now has extensive powers to seize assets under investigation and it appears to be looking at every opportunity to exercise those powers,” said Adam Craggs, partner and head of tax disputes at RPC.
“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.”
Historical events
In January 2018, AFOs and FOs were introduced into the Proceeds of Crime Act 2002.
Regulatory bodies, including HMRC, were given the power to apply for AFOs to prevent money being withdrawn from or deposited into accounts linked to suspected criminal activity.
FOs and forfeiture notices are used to directly seize money that is suspected of having been obtained by unlawful conduct.
RPC said that, prior to these powers coming into effect, regulatory bodies had few options available for seizing money directly from bank accounts without first having to charge the person suspected of wrong doing.
These powers allow HMRC to apply to the court to freeze and forfeit bank accounts without having to bring an allegation of criminal wrong doing to trial.
Powerful weapon
The law firm said that AFOs and FOs are “powerful weapons in HMRC’s arsenal”.
AFOs can be used for amounts as low as £1,000 and while unexplained wealth orders (UWO) can be used to “compel suspected criminals to reveal the source of their wealth”.
At least £50,000 has to be in question for this to be used.
RPC said that the threshold for obtaining both AFOs and FOs to seize funds is “extremely low”.
Money may be forfeited if authorities believe that it has been generated as a result of unlawful conduct or intended to be used in unlawful conduct, “an argument that can be very difficult to counter in court”, the firm said.
