Tax Fraud Lawyer
Tax crimes are one of the most complex areas of criminal and corporate law. Errors in tax reporting, suspicions of tax evasion, accusations of fraud or financial manipulations can lead to serious consequences: fines, account freezes, and even imprisonment. In such situations, urgent and professional intervention by an experienced tax crime lawyer is required.
Our professional solicitors will help avoid potential risks, protect assets, and minimise consequences. A team of experienced lawyers led by a leading solicitor Dr. Anatoliy Yarovyi guarantees protection during tax audits, contesting fines and sanctions, representation in court and negotiations with tax authorities.
What is Tax Fraud?
Tax fraud is the deliberate violation of tax legislation with the aim of evading tax payments, obtaining illegal tax deductions, refunds, or other financial benefits. This crime falls under the category of financial offences and may result in both administrative and criminal sanctions, including substantial fines and imprisonment.
For a specific action to be classified as tax fraud, it must possess a number of characteristic features:
- Deliberate evasion: the taxpayer knowingly conceals income, understates its amount, or forges documents, being aware that they are breaking the law;
- Falsification of financial documents: use of fictitious invoices, forged contracts, false declarations;
- Creation of tax evasion schemes: use of shell companies, fictitious counterparties, offshore structures;
- Concealment of actual activities: maintaining “double accounting” or registering transactions under third parties;
- The use of fictitious tax deductions and benefits: a declaration of tax deductions to which a company or individual is not entitled;
- VAT fraud: issuing false VAT refunds, manipulations with export supplies;
- Money laundering: the use of fake tax returns to legalise income obtained through criminal means.
There are many different criminal schemes that qualify as tax fraud:
- Tax evasion. Consists of understating the tax base, non-payment of taxes, or falsification of reporting. May include concealing part of income from taxation, deliberate understatement of company profits, use of false tax deductions;
- VAT fraud. Commonly encountered in countries with a high VAT rate. Main schemes: “Carousel fraud” – arranging fictitious export operations for illegal VAT refunds; registering shell companies to obtain tax benefits; creating fictitious transactions between companies to artificially increase tax deductions;
- The use of offshore companies. This includes concealing the real owner of the company, fictitious business operations through offshore entities, transferring funds to jurisdictions with low taxation without actual business activities;
- Fictitious employment of staff. Some companies register fictitious employees to reduce the taxable base or obtain tax benefits. Common schemes: “black cash” – payment of part of the salary unofficially, without paying taxes; registering employees as sole proprietors (ИП) to reduce the tax burden;
- Falsification of reporting. Use of fake invoices, contracts, and delivery notes. Manipulations with accounting records to conceal income or inflate expenses.
In most countries, tax fraud is considered a serious crime as it harms the state budget and undermines the country’s financial system.
How the IRS Defines Tax Fraud?
The IRS considers tax fraud as a deliberate violation of tax law with the aim of reducing tax liabilities or obtaining unlawful tax benefits.
The key word here is “willful”. If a taxpayer made a mistake in the declaration out of ignorance or negligence, this may result in fines but is not considered fraud. However, if the actions were deliberate and aimed at deceiving the tax authority, this is already classified as a criminal offence.
The IRS uses strict criteria to identify tax fraud. If the tax authority detects at least one of the following signs, a more thorough investigation begins:
- Willful Failure to Report Income. The taxpayer deliberately conceals part of their income or does not file a tax return at all. Examples: hiding income received from business, investments, or freelancing; using illegal methods to transfer money abroad; maintaining double bookkeeping to conceal actual income;
- Overstatement of Deductions or Business Expenses. The IRS carefully checks to ensure that taxpayers do not overstate tax deductions and expenses. Common violations: claiming deductions for non-existent charitable donations, inflating business expenses that are not actually related to conducting activities, categorising personal expenses as business expenses;
- Falsification of Records. Any manipulation with tax returns, accounting reports, and financial documents is a serious violation. Such actions include altering amounts in tax forms to reduce the taxable base, using forged invoices or fictitious contracts, creating shell companies to conceal income;
- Use of Nominees or Shell Companies. Taxpayers register shell companies or use nominal owners to conceal actual income;
- Offshore Tax Evasion. Tax fraud may include transferring funds to offshore accounts and using complex financial structures to conceal assets. The IRS actively cooperates with international tax authorities to locate undeclared assets abroad.
If you have any questions regarding US tax legislation or are facing accusations of tax fraud, contact our lawyers. We will help protect your interests and minimise potential risks.
Could You Be at Risk of Criminal Tax Fraud Charges?
If you are under investigation on suspicion of tax fraud, it is essential to urgently contact a qualified solicitor. Independent attempts to interact with the tax authority may worsen the situation and lead to criminal prosecution.
Tax authorities distinguish between unintentional errors and deliberate tax evasion. In the first case, the taxpayer may get away with fines and additional tax liabilities. However, if the tax service proves intent, this could escalate into a criminal case.
Tax authorities use advanced analytical tools and international agreements for the exchange of financial data. The main methods for detecting tax fraud include automated analysis of declarations (searching for anomalous data, discrepancies in reporting), comparison of data with bank transactions, checking offshore accounts, questioning witnesses and employees.
If you have received a notification of an audit or a case has been initiated against you, it is necessary to act urgently. Do not speak with tax authorities without a lawyer; any words can be used against you. Gather all financial documents: tax returns, bank statements, accounting reports. Do not destroy documents, as this may be interpreted as an attempt to conceal evidence. Contact a tax lawyer as soon as possible. A qualified specialist will help assess the situation and develop a defence strategy.
Tax Fraud Penalties
Tax Fraud Penalties
Punishments for tax fraud vary depending on the jurisdiction, the amount of evasion, and the presence of intent.
In the USA, the investigation of tax crimes is handled by the Internal Revenue Service (IRS) and the Department of Justice (DOJ). Depending on the severity of the violation, the taxpayer may face:
| Violation | Fine | Imprisonment |
|---|---|---|
| Tax evasion | Up to $250,000 for individuals, up to $500,000 for companies | Up to 5 years |
| Falsification of a tax return | Up to $100,000 | Up to 3 years |
| Failure to submit a tax return | Up to $25,000 for each missed declaration | Up to 1 year |
| False tax deductions | 75% of the amount of unpaid tax | Up to 3 years |
| Conspiracy with the aim of tax evasion | Up to $250,000 | Up to 5 years |
| Money laundering through tax schemes | Confiscation of assets + up to $500,000 fine | Up to 20 years |
Additional sanctions may include the freezing of the suspect’s accounts and assets, confiscation of illegally obtained income, and in particularly large cases, civil lawsuits from the state.
In the United Kingdom, tax crimes are investigated by HM Revenue & Customs (HMRC).
| Violation | Fine | Imprisonment |
|---|---|---|
| Deliberate tax evasion | Up to 200% of the tax amount | Up to 7 years |
| VAT fraud | Up to 100% of the amount of the unlawful refund | Up to 10 years |
| Offshore tax evasion | Up to 300% of the evasion amount | Up to 10 years |
Additional sanctions: confiscation of assets, freezing of bank accounts, disqualification from conducting business.
Each EU country has its own tax laws, but the main penalties are as follows:
| Country | Maximum fine | Maximum term of imprisonment |
|---|---|---|
| Germany | Up to 500% of the evasion amount | Up to 10 years |
| France | Up to 3 million euros | Up to 5 years |
| Italy | Up to 240% of the evasion amount | Up to 6 years |
| Spain | Up to 600,000 euros | Up to 6 years |
Fines for tax fraud can reach hundreds of thousands of dollars, and in some cases, lead to imprisonment. If a tax investigation is being conducted against you or your company, do not delay – contact professional lawyers.
Precautions and Preparations for Tax Fraud
Regardless of whether you are a business owner, a private entrepreneur, or simply a taxpayer, it is important to take preventive measures to avoid risks and protect yourself from potential accusations.
Proper record-keeping is the key way to minimise the risks of tax fraud. Use certified accounting software. Record all income and expenses in reports. Regularly reconcile accounting documents with the tax return.
Regular internal audits will help identify errors before the tax authorities begin an investigation. Check the compliance of tax reports with actual financial transactions. Correct inaccuracies in reporting in advance. Work with auditors who will help minimise tax risks.
Some tax optimisation schemes may appear legal but can, in practice, lead to accusations of fraud. Beware of offshore schemes without real economic activity, fictitious contracts and fake expenses, inflated tax deductions and fabricated losses.
Delays in submitting tax documents may raise suspicion. Ensure that declarations are submitted on time. In case of a delay, notify the tax authorities and clarify the possibility of an extension.
If you are still expecting a tax audit, it is important to prepare for it thoroughly. Before the audit, ensure that you have all the necessary documents: financial reports and balance sheets, contracts with counterparties, primary accounting documents (receipts, invoices).
If there is a risk of a tax audit, it is important to enlist the support of lawyers. A tax solicitor will help protect your rights. A lawyer will prevent unlawful actions on the part of tax authorities. The specialist will develop a defence strategy and help resolve contentious issues.
Consultation With Tax Fraud Lawyer
If you have been summoned for questioning by the tax authority, are undergoing a tax audit, have been accused of tax evasion, your accounts are frozen, and your business or assets are under threat due to tax claims, seek assistance from qualified lawyers as soon as possible.
In all these cases, independent attempts to deal with tax authorities can lead to even bigger problems. You may give testimony that will be used against you or agree to fines that could have been avoided. A lawyer specialising in tax crimes knows all the nuances of legislation, tax audits, and tactics, which will help to effectively build a defence strategy and avoid serious consequences.
Our specialists provide a full range of services for protecting interests in tax disputes:
- Consultation and analysis of the situation. We examine your case, analyse tax documents, check accusations. We identify possible risks and weaknesses in the position of the tax authorities. We develop a defence strategy and minimise consequences;
- Accompanying tax audits. We monitor the legality of actions taken by tax inspectors. We prepare documents and explanations to prevent accusations of fraud. We challenge unlawful claims by the tax authorities;
- Negotiations with tax authorities. We represent your interests in dialogue with tax services. We achieve case resolution without court proceedings. We protect your rights and strive for fair decisions.
- Legal defence in criminal cases. We develop a strong defence strategy in the event of a criminal case being initiated. We challenge the prosecution’s evidence, seek to mitigate punishment or have charges dismissed. We represent your interests in court, protecting business and personal assets;
- Assistance in unblocking accounts and assets. We achieve the unfreezing of financial funds. We help to avoid full confiscation of property.
We work with clients worldwide, helping to protect their interests in complex tax disputes. Our lawyers have deep knowledge of international tax law, which enables them to successfully resolve even the most challenging cases. Hundreds of clients have successfully avoided unjust tax accusations and preserved their assets thanks to our assistance.
Contact us right now for an initial consultation and the development of an effective interaction strategy. We will help protect your rights, minimise fines, and avoid criminal liability.
