Blackfriars Crown Court found David Perrin guilty of tax fraud for the advice he gave to clients that resulted in a total of £70m of tax being dodged.
Perrin’s clients included sports stars and city bankers, all of which he helped to compensate higher tax rate liabilities of 40% by illegally exploiting the Government’s Gift Aid scheme.
Criminal Investigator for HM Revenue and Customs, Jim Graham, said:
“This cynical fraud not only stole millions of pounds from taxpayers, but also conned innocent charities into accepting gifts of virtually worthless shares, just so Perrin could inflate his own criminal earnings.”
Perrin is reported to have committed the large scale tax fraud by advising 600 of his wealthy clients to buy stocks in four companies that he had set up in the Channel Islands Stock Exchange.
Once shares had been bought by clients for mere pence, inflation from sales of shares, humorously sponsored by Perrin himself, increased the buying price to £1.
These worthless shares that had been purchased by clients through Perrin’s advice were given to innocent charities as gifts.
Once the chosen charities had received their share gift, Perrin and his clients tried to claim back tax relief totalling up to £70m for an apparent total income and company profit of £213m.
Individuals can apply for tax reliefs on income and capital gains if they have given shares, property or land to a charity or charities at a price lower than their market value. Doing so helps to considerably lower their tax bill.
David Perrin is reported to have earned £2m from the scam in fees paid by the 600 clients.
Dave Hartnett, permanent secretary of tax at HMRC, said:
“This was a cynical fraud and an outrageous abuse of professional position, exploiting tax breaks put in place to support charities and their vital work.
“We will always pursue tax advisers who act fraudulently in order to line the pockets of crooks at the expense of the honest public.”
Similar tax avoidance schemes offered to clients in 2005/2006 prompted HMRC to change their laws in 2007.
A spokesman for HMRC, said:
“Legislation on tax relief on charitable donations was changed in 2007 and 2010 have placed restrictions on how long the asset must be held by the donor. And only the financial benefit to the charity can be claimed as a tax deduction. These changes stops a scheme like this being effective as an avoidance device.”
The Deputy MD of Vantis Tax Ltd is set to appear back in court for sentencing on 9 February 2012.
Kevin Kinsella Jnr, of KinsellaTax, said:
“There is an old saying that says ‘if it looks too good to be true then it probably is’. Beware of these schemes as not only is Mr Perrin in trouble but HMRC are probably pursuing his 600 clients who participated in the scheme.
“It is amazing how intelligent, educated people who use schemes such as this, when being investigated think that by saying ‘I followed the advice of so and so’, believe that is a sufficient excuse and decline to take any responsibility themselves. It is amazing.”
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