A landscape of lies – film tax fraudsters jailed for over 22 years (HMRC)

A landscape of lies – film tax fraudsters jailed for over 22 years

25 March 2013 14:57
A gang found guilty of making a film solely as a £2.8 million tax scam have been sentenced today in the first prosecution for film tax relief fraud.
HM Revenue and Customs (HMRC) investigators found that the film, A Landscape of Lives, which it was claimed starred Hollywood A-list actors, was never intended for the big screen and was a sham production. The real intent was to defraud the public purse of nearly £1.5 million in VAT along with nearly £1.3 million in film tax credit claims.
Gang leader Bashar Al-Issa, 35, of Maida Vale, London, along with Aoife Madden, of Northern Ireland, Tariq Hassan, of Essex, Ian Sherwood and Osama Al Baghdady, both of Manchester, owned Evolved Pictures. They told their auditors that they had a budget of more than £19 million, provided by a Jordanian company, to produce a blockbuster film in the UK.

Evolved Pictures told HMRC that millions of pounds of work had been spent on the film, including paying actors and film set managers, claiming this meant a VAT repayment was due of £1,488,187. However, during checks HMRC found that the work had not been done and most of the so-called suppliers and film studios had never heard of the gang. Furthermore, capitalising on a scheme designed to support genuine British film makers, Evolved made fraudulent tax credit claims of £256,385.50, while preparing to submit a further claim of £1,033,337.

After they were arrested, the gang came up with an elaborate plan to cover their tracks and hide the fraud by shooting a film on a shoestring, called A Landscape of Lies, featuring two television personalities.

John Pointing, Assistant Director of Criminal Investigation at HMRC, said:

“This gang thought they could exploit rules for genuine British filmmakers and thieve from the public purse for their own gain. They were wrong.

“Falsely claiming VAT that is not due is illegal – so we are pleased that instead of this film flop going straight to DVD, these small-screen z-listers are going straight to jail.”

The gang were found guilty on 12 March 2013. Confiscation proceedings are underway.

Notes
1. Bashar Al-Issa, DOB 13/03/1978, of Maida Vale, London, was convicted on 12 March 2013 of two counts of conspiracy to cheat the public revenue, and sentenced to 6 years 5 months at Southwark Crown Court.
2. Aoife Madden, DOB 01/08/1981, of Northern Ireland, pleaded guilty of two counts of conspiracy to cheat the public revenue and sentenced 5 years 5 months, reduced to 4 years 8 months, at Southwark Crown Court.
3. Tariq Hassan, DOB 18/09/1960, of Ilford, Essex, was convicted on 12 March 2013 of one count of conspiracy to cheat the public revenue, and sentenced 4 years at Southwark Crown Court.
4. Ian Sherwood, DOB 21/07/1959, of Sale, Manchester, was convicted on 12 March 2013 of one count of conspiracy cheating the public revenue and sentenced 3 years 6 months at Southwark Crown Court.
5. Osama Al Baghdady, DOB 01/02/1971, of Crumpsall, Manchester, was convicted on 12 March 2013 of one counts of conspiracy to cheat the public revenue and sentenced to 4 years at Southwark Crown Court.
6. Film tax relief is administered by HMRC and is available to legitimate film makers for British films that are intended to be shown commercially in cinemas and of whose total production costs at least 25 per cent relates to activities in the UK.

UK Budget 2013 (Deloitte)

1.1 Introduction

For detailed coverage and comment on the Budget visit Deloitte’s dedicated website at http://www.ukbudget.com Many of today’s Budget measures had already been set out in the Chancellor’s 2012 Autumn Statement and Finance Bill 2013. However, a welcome surprise was the announcement of a further cut in the headline rate of corporation tax to 20% by April 2015. This is currently at 24% and was previously set to reduce to 21% by April 2015. This additional cut will mean a unified rate of corporation tax of 20% from 2015 for all UK companies. A common feature of more recent Budgets and Autumn Statements is the introduction of anti-avoidance measures. Budget 2013 is no exception with a number of measures being announced, including further restrictions on the use of corporate losses.

1.2 Business Taxes

1.2.1 Corporation tax rates and deferred tax impact
Legislation will be introduced in Finance Bill 2013 to reduce the main rate of corporation tax for non- ring fence profits from 22% to 21% for the financial year commencing 1 April 2014 and from 21% to 20% for the financial year commencing 1 April 2015. This further rate reduction will have an effect on the accounting for deferred tax assets and liabilities for balance sheet dates falling on or after substantive enactment (or enactment for US GAAP purposes) of Finance Bill 2013. There will be an increase in the full rate of the bank levy to 0.142% from 1 January 2014. The reduced rate will be increased to 0.0712%.

1.2.2 Above the line: R&D expenditure credits
The Government confirmed the introduction of the R&D expenditure credits for large companies and increased the headline rate from 9.1% to 10%. Companies will have to elect into the new regime as it will operate alongside the existing super-deduction until the R&D expenditure credits become mandatory in April 2016. Companies with no corporation tax liability, such as those with tax losses, will now be able to access payable cash credits, subject to a PAYE / NIC cap. The details of the cap may still be revised and final details are expected to be included in the Finance Bill. For tax paying companies the R&D expenditure credit will be given as a discharge against the company’s corporation tax liability.
UK Budget 2013
If it counts, it’s covered
The R&D expenditure credit is designed to make R&D relief more visible to those making investment decisions so will be reflected in a company’s operating profit rather than in the tax entries.

1.2.3 Corporation tax loss relief: anti-avoidance
Various measures restricting the use of corporation tax losses are to be introduced effective from 20 March 2013. Draft legislation will be published for comment. – The proposed legislation will increase the threshold which must be exceeded before losses can be surrendered as group relief. The threshold will now include any apportionment of profit made to the surrendering company under the CFC rules. – Legislation will be amended to disallow trading losses where a change in ownership of a company has occurred and there is then a transfer of the trade within the new group. – Existing targeted anti-avoidance rules apply to restrict plant and machinery allowances where there has been a “qualifying change”, such as a change in ownership, in relation to a company. These rules have been expanded. One of the changes is that, subject to meeting certain conditions, they will apply to other qualifying activities, such as property businesses, and not just trading activities. – The change of ownership rules will be extended to cover companies which currently have no business, for example, dormant companies, and there will also be rules to cover unrealised losses.

1.2.4 Loans from close companies to their participators
Where loans are made from close companies to their ‘participators’ a tax charge is payable by the close company at a rate of 25% on any amounts outstanding nine months after the end of the accounting period. The Budget introduced three changes that have effect from 20 March 2013 to tackle avoidance: – the tax charge will apply to any loans from close companies to participators made via various intermediaries (eg partnerships, including LLPs); – the charge will also apply to transfers of value, other than loans; and – the repayment provisions will be amended to deny relief where repayments and re-drawings are made within a short period of time.

1.2.5 Review of loan relationships and derivative contracts legislation
The Government will consult on a package of proposals to modernise the corporation tax rules governing the taxation of corporate debt and derivatives with a view to legislating in Finance Bill 2014 and Finance Bill 2015. This will include measures both to clarify and strengthen the structure of the legislative regime and to update aspects of the detailed rules.

1.2.6 Partnership anti-avoidance consultation
The Government is to commence a consultation on the possible misuse of partnerships with a view to introducing legislation in Finance Bill 2014. The consultation will cover measures to:
– Remove the presumption of self-employment for partners in LLPs. – Counter the manipulation of profit and loss allocations by partnerships, including the use of a company, trust or similar vehicle to secure a tax advantage.

1.3 Personal Taxes

1.3.1 Rates and allowances
The reduction in the additional tax rate from 50% to 45% was confirmed and will take effect from 6 April 2013. The personal allowance for 2013/14 will be increased from £8,105 to £9,440, increasing to £10,000 in 2014/15. From 2015/16, it will increase in line with CPI. The basic rate band will be reduced from £34,370 to £32,010 meaning that higher rate taxpayers will benefit from only part of the increase in the personal allowance in 2013/14. The capital gains tax annual exemption for 2013/14 will be £10,900, and this will also increase by 1% per annum in 2014/15 and 2015/16 to £11,000 and £11,100 respectively. The 1% increase in the inheritance tax nil rate band from 6 April 2015, which was announced in the Autumn Statement, will now not go ahead and the nil rate band will remain at £325,000 until 2017/18.

1.3.2 Seed Enterprise Investment Scheme
The Chancellor announced an extension to the Seed Enterprise Investment Scheme (SEIS), introduced from 6 April 2012 to incentivise equity investment in small, early stage companies carrying on qualifying trading activities. Gains arising from reinvestments in SEIS companies during 2012/13 are fully relieved from CGT. This relief has now been extended in part. Gains arising in 2013/14 which are reinvested in qualifying SEIS investments will be subject to CGT at 50% of the normal rate.

1.3.3 Statutory residence
The Government has announced that certain aspects of the statutory residence test are being revised. These concern the operation of the split year residence rules for individuals who become or cease to be resident in the UK part way through the tax year, the way in which an individual establishes whether they are working full-time and the treatment of international transport workers eg aircrew, mariners etc. Details are expected to be published in the Finance Bill on 28 March 2013. The Government has also announced an amendment to the rules for claiming overseas workday’s relief. The transitional rules for individuals who arrived in the UK by 5 April 2013, and who are still resident at that date, will be amended to ensure that after 5 April 2013 they are able to claim overseas workdays on the same basis as currently.

1.4 Employment Taxes

1.4.1 Employee ownership: capital gains tax relief
A consultation is to take place regarding the introduction of capital gains tax relief on the sale of a controlling interest in a business into an employee ownership structure. The consultation will take into account the progress of the work by the Department for Business, Innovation and Skills and the Implementation Group on Employee Ownership to develop an ‘off the shelf’ employee owned company model. The intention is to introduce the relief in Finance Bill 2014.

1.4.2 Offshore employment intermediaries
The Government will consult on strengthening the obligation to ensure the correct amount of income tax and NIC is paid by offshore employment intermediaries. The aim is to introduce legislation in Finance Bill 2014.

1.4.3 Contracting out for defined benefit pension schemes
From 6 April 2016 members of defined benefit occupational pension schemes and their employers will no longer be able to ‘contract out’ of the State Second Pension. The State Second Pension will close to newly retired pensioners in 2016. Instead pensioners will receive a single-tier State Pension which will be greater than the current basic State Pension. This measure will affect both public sector and private sector employers who operate defined benefit pension schemes and their employees who are members of the schemes. Currently employers receive a contracted out rebate of 3.4% and employees a rebate of 1.4%. A statutory override will allow all private sector employees to cover the costs of additional NIC payments through increasing employee contribution rates or reducing future pension benefits for their existing schemes without breaking the employment contract.

1.4.4 Employment Allowance
From 2014/15 all businesses and charities will be entitled to a £2,000 Employment Allowance towards their employer NIC bill. The allowance will be delivered to employers through standard payroll software and HMRC’s Real Time Information system. Employers will only need to confirm their eligibility through their regular payroll processes.

1.4.5 Employer small loans limit
Currently beneficial loans provided by an employer give rise to a taxable benefit if the total of all such loans to an employee exceed £5,000 in the tax year. This £5,000 limit is to be increased to £10,000 from 6 April 2014.

1.4.6 Corporation tax deductions for employment share acquisitions
The Government has announced its intention to introduce legislation to preclude a corporation tax deduction for accounting charges booked under IFRS2/FRS20 in respect of share options or awards that have lapsed. The Government has stated that in its view this is not a change in the law but rather a clarification of the existing legislation.

1.5 Indirect Taxes

1.5.1 Abolition of Stamp Duty & Stamp Duty Reserve Tax (SDRT) on Junior Market Shares
Legislation is to be introduced in Finance Bill 2014 which will abolish, from 1 April 2014, stamp duty and SDRT on share transactions in UK companies quoted on growth markets such as the Alternative Investment Market and the ISDX Growth Market.

1.5.2 Abolition of SDRT: surrender of units in UK unit trust scheme or UK opened-ended investment company
The SDRT charge for which fund managers are liable when investors surrender their units in UK unit trust schemes or shares in UK open-ended investment companies will be abolished from 1 April 2014.
1.5.3 Targeted anti-avoidance rule for certain SDLT subsale schemes
SDLT subsale relief will be amended with retrospective effect by the insertion of a targeted anti-avoidance rule. The scheme involved artificial arrangements to defer the tax point for SDLT by up to 125 years. The amendment will apply to acquisitions of property completed after 20 March 2012.

1.6 Tax Administration

1.6.1 Tax and UK Government contracts
New rules will be introduced to allow Government departments to preclude companies and individuals who take part in failed tax avoidance schemes from being awarded Government contracts. These rules will apply to contracts with a value over £5 million and apply for tenders advertised after 1 April 2013. Following consultation, HMRC has today published an update which sets out the circumstances in which suppliers would be excluded from the bidding process. This will include suppliers whose tax returns are found to be incorrect under the new General Anti-Abuse Rule (or case law equivalent for indirect taxes); being party to a failed scheme under the disclosure of tax arrangements rules (DOTAS); being convicted for tax-related offences; or having incurred a penalty for civil fraud or evasion. The “look back” period (referring to the date at which non- compliance occurred) has been reduced from 10 to 6 years and suppliers will now only need to certify an occasion of non-compliance after 1 April 2013 and in respect of tax returns submitted on or after 1 October 2012.

1.6.2 Memoranda of Understanding: Jersey and Guernsey
The Government has today published separate but near-identical Memoranda of Understanding between HMRC and the Governments of Jersey and Guernsey relating to co-operation over tax matters. In a manner similar to the previous agreement with Liechtenstein and the recent agreement with the Isle of Man, the introduction is accompanied by the announcement of a window of time in which relevant persons may make a disclosure of previously undisclosed taxable income and receive the benefit of lower-than-normal penalties. Once the disclosure window closes, HMRC will seek to use information exchange to identify any taxpayers who have failed to come forward and will seek to impose severe penalties (which can be as much as twice the tax) or even undertake criminal prosecutions.
The terms of both disclosure facilities will be available from 6 April 2013 until 30 September 2016 and relevant persons may apply to join either of the facilities between these dates.

Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
© 2013 Deloitte LLP. All rights reserved.
Deloitte LLP is a limited liability partnership

Family of tax-dodgers shepherded out of security industry for over 15 years (Insolvency Service)

Family of tax-dodgers shepherded out of security industry for over 15 years

19 March 2013 13:00
Husband and wife team Heather and Lance Shepherd and their son James Shepherd, who ran Shepherd Security Ltd, an alarm company in Preston, have been banned from being company directors for a total of 15 and a half years for failing to pay tax and – in Heather Shepherd’s case only – for acting as a director while bankrupt.
The disqualifications, which follow an investigation by the Insolvency Service, were as follows:
•    Heather Shepherd banned for nine years
•    Lance Shepherd banned for four years
•    James Shepherd banned for two and a half years
The longer term of Heather Shepherd’s ban reflects the fact that, as well as her part in the company’s failure to pay tax, she also acted as a director, although not formally appointed, whilst not discharged from bankruptcy. Her bankruptcy was on the petition of HMRC.

Shepherd Security was incorporated on 17 April 2008 and commenced trading in May 2008 as a 24-hour alarm security centre. The investigation by the Insolvency Service found that the members of the Shepherd family failed to pay tax totalling £186,332.

Specifically, Heather and James Shepherd failed to pay tax from September 2008, just a few months after the company commenced trading. Lance Shepherd was appointed as a director of the company from 15 October 2009 and failed to pay tax from that date.

Commenting on the disqualification, Robert Clarke, Head of Company Investigations Birmingham said:

“A bankrupt who continues to act as a director when explicitly restricted from doing so, shows a total disregard for the insolvency regime, creditors and the business community. What’s more those directors who fail to pay their taxes are gaining an unfair advantage over other businesses and cheating the government.

“The disqualifications of this family for a total of 15 and a half years sends a clear message to others that if they act as directors when not allowed to do so or fail to pay their taxes, then they will be investigated by the Insolvency Service and removed from the business environment.”

Notes
1. Shepherd Security Ltd was incorporated on 17 April 2008, commenced trading in May 2008, ceased trading in October 2010 and entered voluntary liquidation on 29 October 2010.

2. James Shepherd was formally appointed as a director on 17 April 2008, Lance Shepherd was appointed on 15 October 2009 and Heather Shepherd was never formally appointed as a director, but acted as a director in that she exercised control over the financial operations and received the same or similar remuneration to the formally appointed directors.

3. On 31 October 2012 an undertaking was accepted from Heather Cameron Shepherd, which commenced on 21 November 2012. On 1 November 2012 an undertaking was accepted from James Cameron Shepherd, which commenced on 22 November 2012 and on 12 March 2013 an undertaking was accepted from Lance Shepherd, which is due to commence on 2 April 2013.

4. Heather Cameron Shepherd and Lance Shepherd were both previously directors of Shepherd Security (UK) Ltd, which was incorporated on 17 January 2007 and traded as a provider of security installation and monitoring and which went into voluntary liquidation on 08 May 2008. Also Heather Cameron Shepherd and Lance Shepherd were directors of Shepherd Security Systems Ltd which was incorporated on 10 June 2003 and went into administration on 26 January 2007.

5. Heather Cameron Shepherd was made bankrupt on 06 August 2008 on the petition of HMRC. On 27 May 2009 Mrs Shepherd’s automatic discharge from bankruptcy was suspended due to her non-cooperation with the Official Receiver and she remains bankrupt.

6. A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies

7. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Construction boss banned for 13 years for filing false documents (Insolvency Service)

Construction boss banned for 13 years for filing false documents

19 March 2013 12:00
Qasim Ali Munir, director of Farman Homes Limited, a construction company based in Edgeware, Middlesex, has been disqualified for 13 years for using false documents for personal gain, following an investigation by The Insolvency Service.
Mr Qasim Ali Munir, 37, from Stanmore, north west London, has been disqualified from acting as a company director until February 2026. Mr Munir was also known as Asim Ali, Ali Munir and Munir Qasim Ali.

Farman Homes was placed into administration on 19 March 2010, owing creditors approximately £500,000.

The Insolvency Service investigation found that Mr Munir had provided a false document to HM Land Registry, via his solicitors, in order to release a charge held by Farman Homes’s bank on a property he had purchased from Farman Homes. By releasing the charge, Mr Munir managed to ensure that the sale proceeds from the property were paid to him and his associates – and not to the bank.

In addition, Mr Munir had failed to co-operate with Farman Homes’ administrators and failed to deliver up any of Farman Homes’ accounting records. As a result it was not possible to verify certain aspects of Farman Homes’ trading or to establish its assets and liabilities at the date of administration.

Claire Entwistle, Director of Company Investigations North for The Insolvency Service, said:

“Submitting false documents for personal gain is a very serious matter and the courts rightly treat it as such. Directors who fail to do right by their creditors will be in our sights.

“The Insolvency Service will seek to remove them from the business environment.”

Notes
1. Qasim Ali Munir’s date of birth is 31 October 1975

2. Farman Homes Limited was incorporated on 20 July 2004 and went into Administration on 19 March 2010

3. Qasim Ali Munir was the sole registered director of the company at the date of Administration.

4. A disqualification order was made on 27 February 2013.

5. Without obtaining permission from a court, a disqualified person may not:
•    act as a director of a company;
•    take part, directly or indirectly, in the promotion, formation or management of a company;
•    be a liquidator or administrator of a company;
•    be a receiver or manager of a company’s property.
Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

6. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorizes and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

Property developer twins banned for 22 years for scamming £2.5m from public (Insolvency Service)

Property developer twins banned for 22 years for scamming £2.5m from public

19 March 2013 11:30
Two brothers, both directors of Independent Property Consultants Limited (IPC), a company that marketed property developments in Bulgaria and Cape Verde, have been disqualified from being directors for a total of 22 years for ripping off the public to the tune of £2.5 million. The disqualifications follow an investigation by The Insolvency Service.
The 52-year old twins Paul John Aspden, of Lytham St. Annes, Lancashire and Peter Keith Aspden, but currently resident in Cape Verde, were joint directors of IPC. They have now each been disqualified from acting as directors for 11 years, from 4 April 2013 until April 2024, after proceedings that took 12 months.

The Insolvency Service investigation showed that members of the public paid over £1,500,000 to IPC for properties in four Bulgarian developments but these properties never materialised.

The Aspden twins also misled clients into almost £1,000,000 for apartments in the Sal Vista resort development in Cape Verde. Again, customers did not receive the properties they had paid for.

As well as failing to provide the properties customers had paid for, IPC also failed to properly protect customers’ money. Inadequate ring-fencing led to at least £643,244 of clients’ funds being lost and investigators were unable to establish where the money had gone.

Commenting on the disqualifications, Ken Beasley, Official Receiver at the Insolvency Service’s Public Interest Unit, said:

“The Aspden brothers were responsible for significant financial losses suffered by members of the public who never received the foreign properties they paid for. The company misled its customers into making payments for foreign properties and then the directors recklessly failed to protect this money

“By handing down 11-year disqualifications, the Court has shown that such conduct by directors will not be tolerated. The Insolvency Service will take tough action to put a stop to companies trading against the public interest and we will seek to remove culpable directors from the business environment.”

Notes
1. Independent Property Consultants Limited was incorporated on 3 September 2004. The company traded from premises at Unit 7, The Pavillions, Avroe Crescent, Blackpool, FY4 2DP and Unit 39, Cayley Court, Hopper Hill Road, Scarborough, YO11 3JY. The Registered Office of the company was 42-44 Chorley New Road, Bolton BL1 4AP.

2. The company was wound up by the Court on grounds of public interest on 26 May 2010 an investigation by the Insolvency Service authorised by the Secretary of State for Business Innovation and Skills. There were no assets and an estimated deficiency to creditors of £2,573,933.

3. The Court ordered that both Mr Paul John Aspden and Mr Peter Keith Aspden be disqualified from acting as directors for eleven years. The periods of disqualification commence on 4 April 2013.

4. Without specific permission of a court, a person with a Company Directors Disqualification, cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

5. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

6. The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Is a Tesco Giraffe still a Giraffe? When nice little companies get bought up (Andrew Simms The Guardian Newspaper)

Is a Tesco Giraffe still a Giraffe? When nice little companies get bought up

As feelbad companies take over smaller feelgood ones, consumers are finding it harder to express preferences

Andrew Simms
guardian.co.uk, Thursday 14 March 2013 13.00 GMT

Giraffe restaurant in London
Tesco has acquired the Giraffe restaurant chain.

Tesco’s purchase of the family-friendly restaurant chain Giraffe is the latest in a long line of big corporations with problematic reputations buying out smaller firms held in good regard by the public. And in Tesco’s case, it follows the launch of the “artisan” coffee chain Harris + Hoole, which is up to 49% owned by the supermarket chain.

Both fit neatly with the supermarket’s need to reposition itself in the public imagination. But the intention to introduce Giraffe outlets at some of its huge, impersonal Tesco Extra stores may appear odd to parents more used to visiting Giraffe restaurants on London’s South Bank cultural centre, or in winding lanes of Brighton. It could be a very hopeful, or slightly desperate, attempt to humanise and rescue an otherwise depressing supermarket experience, increasingly challenged by online shopping. The purchase puts Giraffe into a special league of smaller feelgood companies taken over by larger feelbad ones.

Gordon Roddick, co-founder of the Body Shop, freely admits that with hindsight he should never have sold the business to global cosmetics giant L’Oréal, which was for years embroiled in controversy over animal testing. He considers it one of the great mistakes of his otherwise impressive career. “We made the very bad mistake of becoming a public company,” he said. “It is the antithesis of becoming a human company.” He wasn’t alone. One by one, successful ethical brands have been subsumed into bigger firms for whom maximising financial returns, a legal obligation of the their shareholder model, means the single bottom line comes first.

Drink an Innocent smoothie now, and – once the increased stake is approved by competition authorities – about 90% of what you pour down your throat will be sold to you by Coke. Likewise, the formerly outspoken, counter-cultural treat of Ben & Jerry’s ice cream notoriously fell into the hands of a company once synonymous with colonial trade, the Anglo-Dutch multinational Unilever. Fast food burger chain McDonald’s flirted with the upstart, fresh sandwich company Pret a Manger, but sold its stake to a private equity firm. The organic food company Seeds of Change was bought by the confectionary giant Mars. It started out as an actual seed company, but in 2010 Mars closed its seed research centre.

Whatever you think of the science of carbon offsetting (many, myself included, find it dubious, or even counterproductive) Climate Care was a small, well-meaning business set up to channel finance from offsets to a range of green energy schemes. It got bought by investment bank JP Morgan and carbon absolutions were offered as an incentive on the purchase of petrol hungry luxury Land Rovers. The management then thought better of it, and bought themselves out from the bank to go private again.

Wholesome makers of “natural” beauty products such as lip balm from beeswax, Burt’s Bees, was bought by a multibillion-dollar American food and chemical company called Clorox, best known for making bleach. While that other staple of eco-stores, toothpaste maker Tom’s of Maine was swallowed up by Colgate-Palmolive. Green & Black’s, pioneer of organic, fairly traded chocolate, has done the rounds, first being bought by maker of mass confectionery and sugary drinks Cadbury Schweppes, before that was taken over by American junk-food giant Kraft.

Rarely are the new lines of ownership obvious to the consumer, leaving most of us assuming we are supporting one, broadly progressive business model, when in fact we’re ultimately supporting global corporations that dance to the tune of big finance, in turn driving inequality and underpinning the economy of the 1%. Where large companies see “progressive” brands as premium products, it is in their interest to keep prices high, leaving more ethical goods in a higher-price ghetto.

It matters, too, because it makes it harder for you and I genuinely to express our preferences, not just for a different product, but different models of ownership that have more than growth and profit maximisation written into their corporate DNA. Scale matters. Economies where power and market share are so concentrated become less resilient, convivial, responsive and open, and probably less innovative and interesting too. It raises what economists call “barriers to entry” to the market for others. Tougher competition rules and dynamic regulators should keep markets properly open.

More than ever today, diverse business models are needed to rebuild a better economy. As Gordon Roddick commented on the history of big corporations: “‘It confirms my belief that closing down the Harvard Business School would be doing a service to mankind.”

Gambling barrister jailed for tax fraud (HMRC)

Gambling barrister jailed for tax fraud

15 March 2013 10:43
A barrister who charged clients VAT but failed to pass the cash to HM Revenue and Customs has been jailed for tax fraud.
Edward Paul Agbaje, of London, has been jailed for 18 months after failing to pay more than £80,000 in tax to HM Revenue and Customs (HMRC) over a seven year period. Agbaje, who specialises in criminal law and practices in Gray’s Inn, London, claimed in court to have gambled the proceeds.

He had been deregistered for VAT by HMRC in February 2005 after failing to submit complete VAT returns dating back to 1994. This meant he was barred from trading above the VAT threshold, which was £58,000 in 2005. However, Agbaje continued to trade, paying no VAT from 2 February 2005 to 17 March 2012. He used his invalid VAT number on invoices during this period and collected more than £59,000 in VAT on fees from clients, pocketing the money rather than passing it on to HMRC.

Agbaje had also failed to file Income Tax returns since 2007, resulting in a tax bill of £18,051.01.

Andrew Sackey, Assistant Director, Criminal Investigation at HMRC, said:

“As a barrister Agbaje should have known better than to try to cheat the system. He thought he was above the law but HMRC will not stand by while criminals try to cheat the taxpayer.

“Declaring and paying VAT due is a legal requirement – not a lifestyle choice – so we are pleased that justice has been served.”

HMRC discovered that Agbaje was continuing to trade during a routine VAT visit to his chambers, when it was found that he was using his old, de-registered VAT number on invoices.

Agbaje has been made bankrupt twice, in 1999 and 2008, relating to non payment of income tax to HMRC.

HMRC currently has a legal profession taskforce operating in London.

Notes for editors

1. Edward Paul Agabje, DOB 23/10/1952, of London, was convicted on two counts of cheating the public revenue, at Old Bailey Crown Court.

2. Agbaje was self-employed during the period of the fraud, working out of 1 Gray’s Inn Chambers, London.

3. Taskforces target specific trade sectors, professions and locations where there is evidence of a high risk of tax evasion. Since May 2011, HMRC has launched more than 30 taskforces across the country and is on target to collect £50 million from the first 12.

High Court accepts rare voluntary ban from company director ahead of trial (Insolvency Service)

High Court accepts rare voluntary ban from company director ahead of trial

15 March 2013 10:30
The Secretary of State for Business, Innovation and Skills has issued proceedings to disqualify Robert Philip Feld of Rottingdean, near Brighton from being a director in relation to his conduct at Aerospace & Technical Engineering Ltd.
Mr Feld is defending the proceedings which were issued under Company Director Disqualification Act 1986 (CDDA) in January 2010.

The trial was first scheduled for May 2012 but was adjourned on the application of Mr Feld to allow for further evidence. The trial was rescheduled to commence on 12 March but the High Court has ordered a further adjournment at the request of Mr Feld on the basis that he continues to abide by the voluntary undertaking he provided to the Court in May 2012.

That undertaking stated that until the final determination of the proceedings or further Court order Mr Feld will not do the following:

“Be a director of a company, act as a receiver of company’s property, act as an insolvency practitioner, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has leave of the court.”

Notes
1. Aerospace & Technical Engineering Limited was incorporated on 11 November 2003 and went into liquidation on 17 January 2008. The company’s registered and trading address was at Unit 5 & 6, Leatherhead Industrial Estate, Station Road, Leatherhead, Surrey KT22 7AL.

2. Disqualification undertakings were introduced in April 2001, they are the administrative equivalent of a disqualification order but do not involve court proceedings. Without specific permission of a court, a person with a company directors disqualification, including undertakings, cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

3. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Accountant’s advice is not privileged (Bluefin professions)

Accountant’s advice is not privileged

The UK Supreme Court delivered its decision in the case of R (On the application of Prudential PLC and Another) (Appellants) the Special Commissioner of Income Tax and Another (Respondents) 2013 UK SC 1, upholding the Court of Appeal’s decision.
Background

The UK Supreme Court has upheld the decision of the Court of Appeal in these proceedings and has refused to extend legal advice privilege to advice given by accountants in relation to a tax avoidance scheme. The key question raised is whether legal advice privilege extends to legal advice given by someone other than a legal advisor and if so how far it extended.

Legal advice privilege applies to all communications passing between a client and its lawyers acting in their professional capacity in connection with the provision of legal advice i.e. advice which relates to the rights, liabilities, obligations or remedies of the client either under private or under public law. The key question in this case was the breadth of legal advice privilege in the sense of the types of advisors with whom communications can attract legal advice privilege.

The Court indicated that there are a number of sources which indicate that legal advice privilege only applies to communications in connection with advice given by members of the legal profession.

These are:

Judicial statements of high authority.
A number of recent decisions which have refused to extend legal advice privilege to legal advice given by trade mark agents, patent agents or personnel consultants.
Current text books on legal privilege.
Official reports.
The rejection by the UK Government of a proposal made by the Director General of Fair Trading that legal advice given by accountants should also have privilege extended to it.
The manner in which Parliament has legislated in relation to this.
The enactment of the relevant provisions of the Taxes Management Act 1970.

The Court indicated that the implications of allowing the appeal would be that it would obviously extend legal advice privilege beyond what has been understood to be its limits for a very long time i.e. to all professionals.

However, the Court indicated that there was a strong case in terms of logic for extending legal advice privilege in the manner in which the appellant sought. Having said that, the Court refused to extend the ambit of legal advice privilege beyond what is currently understood for three reasons:

The consequences of allowing the appeal are difficult to assess. The Court’s view was that it might open the floodgates. It also indicated that trying to determine the professions to which this would apply would be fraught with risk.
It raises questions of policy which should be left to Parliament. It further indicated that here was no pressing need for such a change.
Parliament has already legislated legislation in relation to legal advice privilege which suggests it would be inappropriate for the Court to extend it in this instance. The Court took the view that there must be a reason why it has refused to do so.

The minority took the view that legal advice privilege extended to members of the profession which has as an ordinary part of its function the giving of skilled legal advice and recognising that such privilege would not be extending the scope of legal advice privilege, therefore supporting the view that the availability of legal advice privilege depends on the character of the advi

Five year ban for Scottish farmer who sold on machinery bought on tick (Insolvency Service)

Five year ban for Scottish farmer who sold on machinery bought on tick

08 March 2013 09:30
John Boyd Blackwood, who ran Oxenfoord Home Farm (Pathhead) Limited in Midlothian, has been banned from being a company director for five years for selling machinery that was still subject to finance, so was not the company’s to sell.
Mr Blackwood, from Pathhead, Ford, in Midlothian, has given an undertaking to the Secretary of State for Business, Innovation and Skills that he will not act as a director of a limited company from 15 March 2013 to March 2018.

Oxenfoord Home Farm (Pathhead) Limited went into creditors’ voluntary liquidation on 16 June 2011 owing creditors £494,717.

Prior to liquidation, Mr Blackwood, who was the sole director, had failed to honour the terms of finance agreements on items of farm equipment, namely a tractor and a trailer. The company had purchased these two items separately with finance obtained from two different sources. Mr Blackwood then sold on both these items without repaying the finance owed. As a result the third parties who bought the items had to pay additional costs totalling £44,715 to clear the finance debt.
Clive Tranter, Head of Company Investigations North East and Edinburgh, said:

“Mr Blackwood showed disregard for the finance companies and disregard for the parties who bought equipment from the company that was not its to sell.

“He failed to act properly and, as a result, innocent third parties have suffered. The Insolvency Service will protect businesses and the public by seeking to remove such directors from the business environment”.

Notes
1. Oxenfoord Home Farm (Pathhead) Limited went into creditors’ voluntary liquidation on 16 June 2011 with a deficiency to creditors of £494,717. This company traded as arable farmers and later also as dealers in agricultural machinery from premises at Oxenfoord Home Farm, Pathhead, Ford, Midlothian, EH37 5TY between 1964 and June 2011.

2. The Insolvency Service (in Scotland) deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

3. A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:-
•    act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.
Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies

4. The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of the Insolvency Service is available from http://www.bis.gov.uk/insolvency