GVC faces HMRC investigation over former Turkish business

GVC Holdings has revealed that it is under investigation by HMRC in relation to its former Turkish operations over “potential corporate offending”.

HMRC notified the business on 20 July 2020 that the Commissioners would be widening their scope of the investigation launched in November 2019 to look for wrongdoing within the business.

GVC stated that the decision to expand the scope of the investigation was surprising and that it was disappointed by the lack of clarity that was provided by HMRC as to what was under scrutiny.

Why is HMRC investigating GVC?

HMRC investigation centres around third party suppliers, relating to the processing of payments for online gambling in Turkey.

GVC is yet to be informed as to which subsidiary or subsidiaries are under scrutiny from the UK tax authority.

HMRC have referred to Section 7 of the 2010 Bribery Act in relation to the investigation which covers the failure of corporate entities to prevent bribery, however, has not provided any details of the nature of the investigation taking place.

Section 7 of the Act states that a commercial organisation is guilty of an offence if a person associated with that company bribes another person to obtain or retain business, or to retain an advantage in the conduct of business.

How is GVC connected with the Turkish business?

In 2017 GCV ended its connection with the Turkish business subsidiary ‘Headlong Limited’ in order to pursue its £4 billion takeover of Ladbrokes Coral Plc.

Headlong Limited was divested in November 2017 to an entity called Ropso Malta Limited, for a performance-related earn-out of up to £135.2m. This would have been payable on a monthly basis over 5 years.

After the acquisition had been agreed in December 2017, GVC announced in February 2018 that it would waive the agreed earn-out for the Turkish business.

Following media reports explaining that the deal had been brokered by US investment bank Houlihan Lokey, the operator was forced to publicly deny that it was still benefiting from Turkish operations. GVC claimed that it had waived the earn-out to avoid regulatory delays in order to push the completion of the Ladbrokes Coral deal.

What is a Tax Investigation?

A tax investigation is an enquiry conducted by HMRC into the tax affairs and tax payment history of any UK individual, employee, director or company. A HMRC tax investigation can come in many forms and covers a range of taxes covered under HMRC jurisdiction such as: VAT; income tax; corporation tax and capital gains tax.

The type and severity of the investigation is completely dependent on the facts of any individual case. Typically, an investigation generally commences when HMRC notice irregularities in information supplied via a Self Assessment Tax return. A taxpayer will receive a letter from HMRC informing  them that an investigation has been opened into their tax affairs and may include a request for information.

It is strongly recommended that you consult a tax lawyer as soon as possible to receive detailed advice on how to take control of the situation and negotiate with HMRC.

How will you know if you are subject to a HMRC investigation?

HMRC will notify a taxpayer in writing when it commences to examine their tax affairs. Typically, if HMRC starts a formal civil investigation, a letter will be sent requesting more information. For example, a taxpayer may receive a request for information on a property transaction or further information about a tax return from a local compliance audit.

However, if HMRC suspects criminal VAT fraud or high amounts of tax evaded then it may commence criminal investigations. Typically, unlike for a civil investigation, HMRC are unlikely to notify you at the start of the process but instead you will be informed once you receive a letter requesting attendance to a voluntary interview under caution or when you are arrested.

Alternatively, even where criminal tax evasion is suspected, HMRC may wish to deal with the investigation through the civil route under Code of Practice 9.  This process offers a taxpayer a civil solution for potentially criminal evasion by allowing a full disclosure under contract (Contractual Disclosure Facility).

It is crucial that once under review, specialist Tax Investigation Lawyers are instructed. We regularly liaise with HMRC at formal meetings, agree what the scope of the disclosure should be and prepare the report on your behalf and reach a civil settlement with HMRC.  We have wide-ranging experience in assisting those facing a COP 9 investigation whilst helping to navigate the rigid time-limits and strict rules.

How long will a tax investigation last?

It depends on the scope and nature of the HMRC investigation. The opening letter issued by the HMRC is usually a good guide on the potential length of any investigation. Some tax investigations finish after one letter; other investigations can take months with HMRC consistently requesting more information; and some investigations can be extending to longer than a year if involving complex tax structures or large businesses.

It is important to engage professional advice early on to minimise the length of any investigation as we identify any problems quickly and efficiently to get to the heart of the matter.

Expert London Tax Investigation Lawyers

If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.

Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability.

We provide urgent advice and representation to clients from our unique expert team of established Tax and Duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].