February 17, 2018
The United Kingdom (UK) government recently amended the Proceeds of Crime Act 2002, via the UK Criminal Finances Act, 2017 (the Act). As part of the amendment, the Act empowers UK Courts to issue Unexplained Wealth Orders (UWO or the Order). A UWO is a court order requiring a person (i.e. the respondent) to provide a statement setting out the nature and extent of his/her interest in a property located in the UK, the details of how the property was acquired and all other information as may be required by the UWO in connection with the property. The date of commencement of the issuance of the UWO is 31 January 2018 but it would cover properties acquired prior to 31 January 2018.
The Act also states that the respondents (including non-UK residents) to whom a UWO would be issued include politically exposed persons, persons with criminal records, involved or suspected to be involved in serious crimes or those persons connected to them.
Based on the provisions of the Act, the Court will issue a UWO to a respondent, where it is reasonably satisfied that the respondent holds a property in the UK worth above £50,000, and the court has reasonable grounds to believe that the known sources of the respondent’s lawfully obtained income would have been insufficient to acquire property of that value. A respondent’s property will be forfeited if the respondent fails to comply with the requirements imposed by a UWO, without any reasonable excuse.
In the light of the global trend on automatic exchange of information amongst countries, information obtained from the UWO may form part of information available for exchange amongst government authorities. More so, the Nigerian government is a party to the Common Reporting Standard Multilateral Competent Authority Agreement (CRS-MCAA) and other cooperation agreements that will help the relevant authorities to deal with the menace of tax evasion. Although the CRS-MCAA is yet to be passed into law in Nigeria, there are strong indications that the agreement will soon be enacted into law given the Federal Government’s recent drive to increase tax revenue collection.
Consequently, it is imperative for taxpayers to take advantage of the ongoing Voluntary Assets and Income Declaration Scheme (VAIDS) to declare their income and assets and regularise their tax affairs.