Jan 27, 2025
A UK Court Has Ruled in Favour of Seizing the Tate Brother’s Assets for Unpaid Taxes
The Tate brothers, Andrew and Tristan, are British-American influencers known for their controversial online presence, particularly Andrew, who has amassed a significant following through social media for his misogynistic views and lifestyle advice. They have been embroiled in numerous legal troubles. In late 2022, they were arrested in Romania on charges including human trafficking, rape, and forming an organized crime group to sexually exploit women. Additional allegations emerged in 2024, including trafficking minors, sexual acts with minors, money laundering, and attempting to influence witnesses. These new charges led to further arrests and house arrest in Romania for Andrew in August 2024. They’ve denied all charges.
In 2024, they faced legal action in the UK for tax evasion related to their businesses. A court has ruled that UK police can seize more than £2m from influencer Andrew Tate and his brother Tristan after they failed to pay tax on £21m of revenue from their online businesses. Some of the revenue was directly linked by detectives to allegations of human trafficking that the brothers face in Romania. A large portion of the money was paid into an account in a third person’s name. Part of the money that police applied to seize was cryptocurrency held in an account in the third person’s name. The judge said he was “satisfied” that the brothers had “engaged in long-standing, deliberate conduct in order to evade their tax.
Comparison to the Canadian System
In Canada, when there is an unpaid tax debt, the CRA will generally follow a standard process of enforcement, applying various methods of collecting that debt in order of increasing aggressiveness.
Income tax debt collection usually begins with phone calls and written letters from a collections agent. Enforcement actions for GST/HST debt may begin without any prior notice of the debt without the need to apply to a court set in the case of a jeopardy seizure of assets.
In a similar fashion to HMRC, His Majesty’s Revenue and Customs, the CRA also has the power to seize taxpayer physical assets to pay off a debt, but in order to do this, the CRA must apply for a writ or memorial. This usually only applies in severe cases. Other more common enforcement actions include:
- Wage Garnishment: The CRA can issue a Requirement to Pay (RTP) to an employer, directing it to withhold a portion of wages and send it directly to the CRA to cover your tax debt.
- Property Liens: The CRA can place a lien on properties you own, including your home, giving them priority over funds from the sale of that property. If the property is sold, the CRA gets paid before you receive any proceeds.
- Bank Account Freezes: The CRA has the authority to seize funds from your account without much warning to collect the tax debt directly from your funds. As a matter of internal policy, banks will usually freeze the account.
- Third-Party Demands: The CRA can instruct third parties who owe you money, such as Accounts Receivable, to redirect payments to them instead through a Requirement to Pay notice.
When the CRA employs these methods to collect on their debt, it can cause great hardship to the taxpayer. Before resorting to these more aggressive collection actions, the CRA often encourages taxpayers to set up payment plans.
If a payment plan is negotiated, the CRA may agree to lift one or more of these sanctions as long as progress is being made to pay off the debt. If you can’t pay in full, your experienced Canadian tax lawyer can negotiate a payment schedule, but interest will continue to accrue on the unpaid balance.
Pro Tax Tip: There is a 10-Year Limitation Period on Collecting Tax Debt
The CRA is barred from collecting on tax debt where enforcement action has not been taken for 10 years from the day a notice of assessment was issued, or the last enforcement action was taken. To avoid extending the collection period as much as possible, a tax debtor should refrain from acknowledging or paying the debt, as this will reset the limitation period. According to subsection 222(5) of the Income Tax Act and 313(2.4) of the Excise Tax Act, a taxpayer can acknowledge the debt in one of three ways:
- By providing a written promise to pay the debt.
- By making a written acknowledgment of the debt.
- By making a payment or attempting to make a payment that is subsequently dishonoured, such as a bounced cheque.
Any of these actions will “reset” the limitation period, placing the taxpayer back at the 10-year starting point. This underscores the importance of seeking professional tax advice from experienced Canadian tax lawyers before communicating directly with CRA tax collections officers.
FAQ
How soon after a tax debt notice can the CRA start taking action?
For income tax debt, CRA provides a 90-day period after issuing a notice of assessment or reassessment where no collection action is taken as mandated under the Income Tax Act, unless there’s a risk the debt won’t be recoverable. For GST/HST debt, there is no such mandatory notice period, and the tax debt is immediately collectible.
What are the consequences of ignoring CRA collection notices?
Ignoring notices can lead to escalated enforcement actions such as asset seizure, wage garnishment, or even legal proceedings where the CRA can obtain court judgments against you, such as a writ or memorial to seize and sell your assets. As such, it is important to receive advice from a Canadian tax lawyer on how to proceed if you cannot pay off the debt rather than ignoring it.
Can the CRA enforce tax debts against my spouse or family?
Generally, no, unless there’s a legal basis, like joint ownership of assets or if your spouse co-signed for a debt. However, if assets are commingled or if there’s evidence of fraud or tax evasion involving family members, the CRA might investigate further.
If a tax debtor transfers money or property (e.g., cash or the family home) to you for less than fair market value, during a year in which the debtor owes money to the CRA, or during any later year, the government can assess you under section 160 of the Income Tax Act for the net value of what you have received. The same general rule applies under section 325 of the Excise Tax Act for any unremitted GST or HST the tax debtor may owe.
Disclaimer: This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.
