R v Perrin

[2012] EWCA Crim 1729, Court of Appeal (Criminal Division), Lady Justice Rafferty, Mr Justice McCombe and Sir Geoffrey Grigson, 5 July 2012

Tax evasion - Cheating the Revenue - Dishonesty - Scheme for abusing charitable donations through donating shares - Valuing the shares - Conviction - Whether sentence unduly lenient

Perrin (P) and his co-accused (F) were directors of a company called Vantis Tax Ltd (Vantis) which was part of a larger group of companies. Vantis's principal activity was the provision of specialist tax consultancy services. On 12 January 2005, Vantis instructed tax counsel to advise on the fiscal consequences of donating shares in a company listed on a recognised stock exchange to charity. On 18 January 2005 counsel confirmed that such donations could be claimed as a charge against income under section 587B(2)(a) of the Income and Corporation Taxes Act 1988 in the amount of the net benefit conferred upon the charity. This value would be fixed as the market value of the shares less any consideration which had been given. P & F proceeded to arrange schemes based on tax counsel's advice. The prosecution case against P & F was that they had invited subscriptions for shares in a number of companies at prices of between 0.01p and 3p per share. The subscribers were then advised to donate the shares to charities and claim tax deductions against accrued income tax liabilities under section 587B of the 1988 Act at much higher values than the subscription price. The increase was said to have been attributable to the rise in the value of the shares between subscription and the date of the donation. If left unchallenged, the loss to HM Revenue & Customs (HMRC) would have amounted to £70 million worth of tax credits which would have been allocated to the shareholders. In the event, HMRC's losses were limited to £5 million. The prosecution alleged that P & F must have known that the share value as claimed at the date of the donations was substantially in excess of their proper value and that they were perpetrating a deliberate and dishonest cheat on the public revenue. P was convicted and sentenced to 18 months' imprisonment. The jury was unable to reach a verdict in respect of F on count 1. P was acquitted of a similar offence on count 2 by direction of the trial judge.