Do HMRC's allegations of fraud against GE signal a new era in tax investigations?
Helen Buchanan and John Tolman from our London tax team discuss the High Court decision in HMRC v IGE USA Investments Ltd & others considering whether HMRC should be allowed to rescind a settlement agreement reached with General Electric (GE) in the briefing at the link below.
In this case, HMRC sought to amend its pleadings to introduce a claim that three representations, allegedly made by GE in the course of discussions leading up to the settlement, were made fraudulently. HMRC's allegations concerning two of these representations were dismissed; however, the High Court felt that the evidence in support of HMRC's third allegation - that GE deliberately failed to disclose the complete picture - was enough that it should be allowed to pursue that argument at trial.
The briefing explains that while this creates an eye-catching headline there is a long way to go yet. These allegations will no doubt be vigorously defended by GE once the case goes to trial, and it remains to be seen whether HMRC will ultimately succeed in establishing fraudulent behaviour. Nevertheless, the case is a useful reminder of the need to represent facts carefully and consistently in correspondence and negotiations with HMRC and other tax authorities. More generally, it reflects HMRC's hardened attitude towards cross-border hybrid and debt planning by multinationals.
This briefing was originally published in Tax Journal on 11 September 2020.
Do HMRC's allegations of fraud against GE signal a new era in tax investigations
(PDF - 273.5 KB)