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08 Feb 2012

Corker Binning partner comments on Redknapp tax evasion case

Peter Binning, Corker Binning, comments in the Financial Times on the Harry Redknapp tax evasion case and questions whether HMRC should ever have brought the case to court.

Redknapp acquittal raises queries over HMRC

The acquittal of Harry Redknapp on tax evasion charges following a high-profile 13-day trial has raised questions about whether HM Revenue & Customs should have brought the case to court at all.

The verdicts in the high-profile tax evasion trial will pave the way for Mr Redknapp to succeed Fabio Capello, who resigned on Wednesday, as England manager but will come as a blow to HMRC, which has spent five years pursuing him.

Watched by his son Jamie, Spurs officials and a packed public gallery, Mr Redknapp hugged co-defendant and former Portsmouth owner Milan Mandaric after the jury of eight men and four women returned a unanimous verdict on the two counts against each of them following five hours of deliberations.

Later the Spurs manager emerged from Southwark Crown Court to tell a scrum of more than 50 reporters and photographers that the case “should never have come to court”.

Mr Redknapp and Mr Mandaric were charged with having “deliberately and dishonestly” paid and received two sums totalling $295,000 into a Monaco bank account.

The jury accepted Mr Redknapp’s explanation that payments into the Monaco account – named after his dog Rosie – were nothing to do with a bonus he had been promised for the sale of striker Peter Crouch but were in fact “seed money” loaned by Mr Mandaric which had been intended for investments.

It can now be reported for the first time that Mr Mandaric was last year acquitted, along with former Portsmouth chief executive Peter Storrie, of separate charges of evading £600,000 in taxes over player transfer payments.

The verdict will be a setback for the HMRC, which has high conviction rates and plans to step up the number of criminal prosecutions it brings from about 100 a year to 500. It has been given £900m by the government to clamp down on tax avoidance and evasion.
“These type of prosecutions almost always succeed,” said Kevin Robinson, head of regulatory and criminal investigations at law firm Irwin Mitchell.

“There are mitigating and aggravating features – if it’s high value, deliberate and persistent these are all aggravating features. The Revenue will prosecute the most egregious cases and now and again they will go after a high-profile scalp,” he added.
Some 336 people were convicted in 2010-11 as a result of investigations brought by HMRC and 54 defendants were acquitted, although there is no breakdown of how many convictions relate to tax evasion as opposed to other crimes.

But some lawyers questioned whether the Redknapp case – which at best involved £70,000 of tax – should have been brought to court given that the costs of the trial and investigation could potentially run into millions of pounds.

Peter Binning, a financial crime specialist at law firm Corker Binning, said: “There is no reason why the Revenue could not have settled this case without it coming to court. This could have easily been done – it is a bit of a mystery why it’s been brought.”

Ronnie Pannu, a former inspector of taxes who has been with PwC tax investigations for 15 years, said while HMRC had been actively targeting VAT and carousel fraud, now there seemed to be a renewed vigour in tackling tax evasion and offshore bank accounts.

Tax evasion costs the UK economy an estimated £69.9bn each year. The Revenue defends its strategy by arguing that bringing high-profile cases such as the Redknapp trial – and in the past, its pursuit of Ken Dodd and Lester Piggott – helps persuade ordinary people to fill in their tax returns properly.

HMRC said yesterday that publicity around the trial has already prompted a number of people with offshore bank accounts to come forward.

The Revenue has just extended an amnesty for offshore tax evaders with Liechtenstein bank accounts, which means that more than 2,000 Britons with undeclared offshore assets have used the Liechtenstein Disclosure Facility, which charges relatively modest penalties for investors wanting to come clean.

By Jane Croft and Roger Blitz