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HMRC secures successful prosecution of six men involved in £107m environmental tax fraud

A 10 year investigation by the UK's HM Revenue & Customs (HMRC) has led to the prosecution of a group of men involved in a fraudulent scheme to evade tax.14 Nov 2017

The group of six men were handed prison sentences ranging from 20 months to 11 years for their roles in the scam, which saw them persuade high net worth individuals to invest in environmentally beneficial schemes and claim tax relief on the investments. However most of the investments never existed and the conspirators used the money for personal gain.

In sentencing the men (12 page / 278KB PDF), the Crown Court said around 730 people invested large sums in the scheme, claiming tax relief of £107 million. The judge said the use of offshore companies in the British Virgin Islands and Swiss bank accounts and trusts which were solely created to hide and launder the proceeds of the fraud was “a seriously aggravating feature of this case”.

The judge added: “This case involves a scheme whose chief characteristics were utter dishonesty, sophisticated planning, and astonishing greed hidden behind a mask of concern for the environment which adds an element of hypocrisy and cynicism to this case which is deeply distasteful.”

The £107m involved was an “intended” rather than actual loss, although several of the defendants were found to have evaded several million pounds in unpaid tax on the proceeds of the fraud.

Director of Public Prosecutions Alison Saunders said the fraud was uncovered after a large internal investigation involving HMRC, the Crown Prosecution Service (CPS) and foreign authorities.

The prosecution follows soon after new figures were released showing that HMRC's specialist fraud investigations team recovered almost £5.2 billion in tax last year, and prompted a number of high profile criminal prosecutions.

Tax investigations expert Paul Noble of Pinsent Masons, the law firm behind Out-Law.com, said the specialist team sent out a clear message that tax fraud would not be tolerated.

The use of offshore vehicles has also been under recent scrutiny after the leak of millions of documents from offshore law firm Appleby, known as the Paradise Papers, which Noble said would increase regulatory scrutiny as HMRC seeks to tackle tax evasion.