What would you do? ......false declaration of billing and payment.

[joispoi]

Last Thursday night I got home and found a notice of attempted delivery for a registered letter in my stack of mail. I've never received anything that I've been happy about by registered mail, so I spent the evening trying not to think about it. I could write a few pages about the lazy local post office employee that I had to deal with on Friday morning, but let's just say that by the time the post office was opened and I finally retrieved said letter, I'd wasted a good part of the morning and wasn't in a very good mood.

The letter was a formal request from the tax man to procure all bills sent to and records of payments received from customer "X". This customer "X" is a general construction company in a town 45 minutes away from where I live. Before I opened that letter, I'd never heard of them. I did a little research on them and it turns out that they are in financial trouble and they owe back taxes. It appears that they've made fake bills using my company name and declared them as write-offs as subcontracting expenses. As far as I know, my company was chosen at random.

This is causing some headaches on my end. My accountant is going to reply to the tax man that I've never heard of these jokers before. However, I'm not sure that I'm satisfied with vindication. I want revenge.


My first thought was to haul a load of stumps and crap and dump it at their entrance....right up against the gate. But, that would take about 2 hours when all was said and done and I might as well wait until I have a job in their neck of the woods. Then I got to thinking. If they've attested that they've received bills from me, then I might have recourse to collect on those bills. I'm thinking about having the accountant send them a letter stating that all bills that they've declared in my name are due and payable in full immediately. If nothing else, it might get me a letter from them saying that they've never heard of me, never received a bill from me and they don't owe me anything. I could send that along to the tax man in hopes of avoiding an audit.

Has anybody run into this kind of problem before? How would you handle it?

(2014 is off to a weird start)

 

[clintm]

never heard of this before but sounds like a good idea to demand payment on fake invoices they will either pay or deny claims and you win either way

 

[stock]

My advice is to contract your accountant and have him inform the IRS that you,your company or agents had no business dealings with this company. If you try and claim any false invoices any tax due on foot of the invoices will be payable by you your company or agents.

 

[overworked]

Yep. You would have to claim tax on those bills, weather paid or not. Correct?

 

[joispoi]

Tax is due on money received.

 

[CM1995]

This would **** me off and it sucks that you have to deal with this but in my experience it's better to clear yourself of this matter and go on. Retribution begets retribution and they already have your company info, what else could they do?

Now I am not one to just take it on the chin but I would be inclined to just clear it with the tax man and let it be. There is no benefit, money wise, for you to get into a battle with these jokers. I would concentrate on my business and making money.

 

[joispoi]

Stock, the accountant is already working on that. It's splitting hairs, but I wouldn't be claiming the invoices. I would be demanding payment for invoices that they have declared on a legal document handed into the tax agency. At this point, the state already has the falsified bills and statements and they're coming after me to verify them.

I pay a monthly fee for my accountant which includes coverage for limited legal services. The accountant is going to deal with this for me. If I were to try to collect on the falsified bills, I would just forward everything to a collection agency and let them do their thing. It's highly unlikely that I'd see any money out of this, as they are in the preliminary steps toward seizure and liquidation (some companies manage to recover and stay afloat, but it's hard to predict).

CM- once again, sound advice. I definitely have more important things to worry about. Keeping out of trouble with the law is not something that I usually have to put much thought into. I try to run my business without stepping on anybody's toes and try to keep a low profile. BUT, they dragged me into their problems.

As for what else can they do to me?.... I have to say that I didn't see this coming, so it's anybody's guess. So far they haven't done anything that doesn't allow me to throw them under the bus while the tax agency is verifying their declarations. Maybe it just ends there.

 

[grandpa]

Trying to collect on fraudulent bills is fraud in itself. Do as Cm1995 move on and get over it,,, consider it as another lesson learned about the evil people out there!!!

 

[John C.]

It depends on the state as to when you have to declare sales and taxes. Small companies in Washington state get a choice on declaring when they bill or when the payment is received. Most companies elect to declare when they bill. It seems to me that some legal authority has already caught the scent of tax fraud and is only looking for the proof to haul the offender into court and possibly a jail cell. I would be more than happy to supply anything necessary to complete that future outcome. Revenge enough?

 

[joispoi]

Trying to collect on fraudulent bills is fraud in itself. Do as Cm1995 move on and get over it,,, consider it as another lesson learned about the evil people out there!!!

Grampa- I suppose I should keep in mind that I'm just a worker ant in the grand scheme of things. Guys who commit fraud on the billion $ level can buy their way out of it. I don't think I'd get the same white glove treatment. But, truth be told I don't see money in this. I was just thinking about stirring up their pot a bit and hopefully getting a letter stating that they'd never heard of me and don't owe me squat.

It depends on the state as to when you have to declare sales and taxes. Small companies in Washington state get a choice on declaring when they bill or when the payment is received. Most companies elect to declare when they bill. It seems to me that some legal authority has already caught the scent of tax fraud and is only looking for the proof to haul the offender into court and possibly a jail cell. I would be more than happy to supply anything necessary to complete that future outcome. Revenge enough?

John, C. - The term "jail cell" has a nice ring to it.

I'm a bit behind on work right now, so really don't have time to dwell on this. Thanks to all of you who've taken the time to share your thoughts as I've had this at the back of my mind for the past 48 hrs. It helps to think out loud and vent a bit. The wisdom and reason you guys share are much appreciated.

Hopefully my next thread will be about building a fence or installing micro-stations instead of about people who are trying to rip me off or get me in trouble.

 

[stock]

Grampa- I suppose I should keep in mind that I'm just a worker ant in the grand scheme of things.

John, C. - The term "jail cell" has a nice ring to it.
The wisdom and reason you guys share are much appreciated.

Hopefully my next thread will be about building a fence or installing micro-stations instead of about people who are trying to rip me off or get me in trouble.

Well this issue is all part of the industry and you raising this will warn others and assist them in dealing with it. Here when an invoice is written the taxes are due, and it on those grounds my comment was based. My experience with the revenue service is to be full and honest because if some thing is found to be deliberate fraud the penalties are severe as well as the fact that they can audit for seven years worth of accounts, with the onus on me to prove that the money is not owed.

Leave it to the accountant and get on with the day to day grind.

 

[joispoi]

Stock, when I was in Iceland, tax was due when an invoice was declared. Here, it's due on payments received. I understood exactly where you were coming from with your post and your advice is greatly appreciated.

 

[oldtanker]

This is just another scam. Like the emails you receive offering to give you millions to use your bank account. This is the time to produce what you have to clear yourself and mark it down as lesson learned.

This is not the time for revenge. The only thing you get out of that is a smug feeling that will quickly go away if you are charged for it.

Rick

 

[JBGASH]

Let your accountant take care of it in an honest manor with the IRS, additional fraud on your part or revenge of any type will open another can of worms for you to deal with. The IRS is relentless and he will get what he has due before they are through with him.

 

[BodyBuilder]

I agree with CM1995, Clear Your Company Name & Move On. As much as it may anger you that it has happened, you are the better Person to Rise Above the underhanded actions and besides, every minute your mind spends on the situation, the less time you have spent on the progress of your legitimate Business.

 

[caterpillarmech]

All of that sounds good but, a two foot trench across his drive way sounds better. Who doesn't want a moat?:naughty

 

[simonsrplant]

Let the law play it's course. I've no experience of your justice or tax system, but I'd ride it out. In a few years when the dust has settled, see how you feel.

 

[PhilDirt]

This should be easy to clear up. My guess someone was creating false expenses to cover up money he or she was taking out of that business. Just tell the prosecutor you've never done business with or even heard of them, and that SHOULD be the end of it. If later on they think you have received money from them, they will look in your bank accounts, there's nothing for them to find and that will be the end of it. If someone used your name, I'm sure they used other names as well, and they have to track down all the loose ends, that's what the request to you is about.

I had an office girl embezzle money from me some years ago, judging from what I learned then and all the stories about such I've heard since then such things are an everyday issue for the folks at the tax service and for local prosecutors.

 

[stock]

A case in the UK...........

Fake contractors jailed for £4m VAT scam

Grant Prior | Fri 14th February | 15:37


Eleven members of a gang who set up 23 fake construction companies to steal £4m in a VAT fraud have been sentenced.

The gang used ”puppet” directors, fake invoices and bogus building contracts for housing developments as a smokescreen to hide their crimes.

People were paid up to £35,000 to act as directors and allow the gang to use their names and addresses to set up the bogus companies, with the sole purpose of claiming illegal VAT refunds.

HM Revenue and Customs officers became suspicious after they carried out checks on a number of companies involved in the building trade across the North West of England.

They discovered that many of the companies were linked – regularly providing services to each other and using the same accountant.

They also used the same invoices, receipts and accounts figures to make sizeable claims for VAT refunds.

Jo Tyler, Assistant Director, Criminal Investigation, HMRC, said: “We identified suspicious trading by several companies, all of which ultimately led to fraudulent VAT repayment claims.

“The gang ran the fraud from premises in Preston and then filtered the money through company bank accounts with large sums of cash shared out between those involved or transferred abroad.

“This was a deliberate attack on the UK VAT system to fund criminal lifestyles.

“Tax fraud and attempts to launder the proceeds of crime are treated extremely seriously by HMRC, and we will relentlessly pursue any individuals or crime gangs believed to be involved.”

Several key players in the fraud were put under surveillance as evidence built up against the gang and in 2011 HMRC officers searched 21 premises, making 16 arrests across the North West and in Sussex.

Officers found that all of the companies had been using fake invoices and receipts from some of the UK’s leading building suppliers, none of whom had ever dealt with or heard of the companies run by the gang.

The gang also produced fake contracts for work, including a £3.5m housing development in the West Midlands in order to make their work in the building trade look legitimate.

HMRC found 23 companies involved in the chain which had traded for approximately 18 months in an attempt to defraud UK taxpayers out of £4,328,386.

Most of the companies had never carried out any building work or traded legitimately during the period of the fraud.

Ten of the 13 gang members were jailed at Manchester Crown Court on Friday 31 January 2014 and one was jailed at Manchester Crown Court today.

Confiscation proceedings are under way for those involved.

The following gang members were sentenced on Friday 31 January 2014 at Manchester Crown Court:

· Adam Chadderton of Leyland, Lancashire was found guilty and was sentenced to three and a half years in prison. Chadderton was one of the key leaders in the fraud, working at Forte Accountants based on New Hall Lane, Preston.

· James Price of Landford Place, Liverpool was found guilty and sentenced to two and a half years in prison.

· Michael Lacy of July Road, Liverpool pleaded guilty and was sentenced to three years in prison.

· Timothy Miller of Arnhem Road, Preston pleaded guilty and was sentenced to 26 months in prison.

· John Carroll of Millbrook Mews, Lytham St Annes, Lancashire pleaded guilty and was sentenced to two years in prison, suspended for two years. He was also ordered to carry out 200 hours unpaid work and given a three month curfew between the hours of 9pm and 5am.

· William Ainsworth of Ribblesdale Avenue, Accrington pleaded guilty and was sentenced to two years and eight months in prison.

· Nigel Tindall of Hope Street, Accrington pleaded guilty and was sentenced to eight months in prison, suspended for one year. He was also ordered to carry out 100 hours unpaid work and was issued with a one month curfew between the hours of 9pm and 5 am.

· Jackie Simmonds of Ribblesdale Avenue, Accrington pleaded guilty and was sentenced to 20 months in prison, suspended for 18 months. She was also given a 12 month supervision order.

· Lee Marsh of Greystone Close, Bolton pleaded guilty and was sentenced to one year in prison, suspended for one year. He was also ordered to carry out 120 hours unpaid work and issued with a one month curfew between the hours of 9pm and 5am.

· Colin Lavelle of Hazelwood Lane, London pleaded guilty and was sentenced to two years in prison suspended for two years. He was also ordered to carry out 200 hours of unpaid work and issues with a three month curfew between the hours of 9pm and 5am.

· Lee Marsh of Greystone Close, Bolton pleaded guilty and was sentenced to one year in prison, suspended for one year. He was also ordered to carry out 120 hours unpaid work and issued with a one month curfew between the hours of 9pm and 5am.

· Colin Lavelle of Hazelwood Lane, London pleaded guilty and was sentenced to two years in prison suspended for two years. He was also ordered to carry out 200 hours of unpaid work and issues with a three month curfew between the hours of 9pm and 5am.

The following gang members were sentenced on 14 February 2014 at Manchester Crown Court:

· Eamon Burke of Redwood Close, Blackpool was found guilty and sentenced to three years and eight months in prison.

A further hearing will take place at Manchester Crown Court on 25 February 2014 to sentence:

· John Hardman of Coniston Road, Preston who pleaded guilty at an earlier hearing.