At Kangs Solicitors we have a dedicated team of solicitors working exclusively on defending tax investigations, fraud and white collar crime allegations. The team is headed by Hamraj Kang.
Simon Morgan of Kangs Solicitors provides details below of a recently concluded complex tax fraud case to demonstrate the type of work undertaken by the team of fraud solicitors at Kangs.
The Case of Norman Leighton| Fraud Solicitors
Our client Norman Leighton was tried at Birmingham Crown Court alongside four others on a single count of conspiracy to cheat the Revenue (HMRC).
The alleged loss to HMRC was in the region £100m. The criminal investigation began in 2008 and lasted almost five years before charge and involved enquiries conducted in four separate continents.
The Trial Judge, His Honour Judge Drew QC described the case in his sentencing remarks as:
“The most difficult and complex case I have seen prosecuted at the Bar.”
The original indictment period spanned the period 2002 to 2011 and alleged three separate conspiracies (cheating the Revenue, defrauding investors and false accounting).
The Details of the Fraud| Tax Fraud Solicitors
Our client was a Monaco based Corporate Services Provider (CSP).
In 2002 his family run business accepted instructions from a UK based film production company, Little Wing Films (LWF) to undertake management services for a BVI registered company, International Film Collective (IFC).
LWF was operated by the three principal defendants and was an established UK film financing business.
In 2002, the principal defendants had devised a tax avoidance scheme to take advantage of (the then) generous UK Government tax incentives designed to encourage investment in the British film industry.
High net worth individuals were persuaded to invest in film pre-production and development.
Between 2002 and 2005, four Limited Liability Partnerships (LLPs) were established to pool investments from their members and expend funds on film pre-production services purportedly provided by IFC. Services were contracted to be provided over 10 years.
As the services were paid for upfront, members of the LLPs could use sideways relief to offset losses they made in each year trading of the four LLPs, to reduce their income tax bills.
Between 2003 and 2005 over one quarter of a billion pounds was expended by the LLPs on services purportedly provided, or to be provided by IFC.
However, 98% of the funds were paid by IFC to a Guernsey based entity operated by another CSP acting as a subcontractor.
From there the funds were routed through a complex offshore corporate network via loans and equity subscriptions, and ultimately either invested back into the LLP by a corporate investor, or loaned back to LLP members as non-recourse loans.
Approximately one third of the investors’ money was extracted by the principal defendants, using a variety of means including a Geneva and Liechtenstein sub-trust.
Once back with the LLPs, funds went on to be expended on IFC services in a circular fashion.
302 film projects were the subject of development and pre-production services.
However, the issues for the jury involved principles of pure tax law including:
- Whether the trade of the LLPs was conducted ‘on a commercial basis’; and
- Whether the expenditure on IFC was ‘wholly and exclusively for the purposes of the trade’.
In the course of the trial we ran a successful argument to exclude an unlawful interview conducted in Monaco by HMRC, based on the application of European Treaties, Monegasque law and traditional domestic principles of sections 76 and 78 of the Police & Criminal Evidence Act 1984.
The Trial | Tax Investigation Solicitors
The trial lasted for approximately 7 months.
It was initially dismissed by the trial judge at the close of the prosecution case. But on a prosecution appeal against the terminatory ruling the Court of Appeal reinstated the trial.
The jury deliberated for over 56 days before acquitting the last defendant and convicting our client and the principal defendants.
At sentence our client received a two year sentence of imprisonment suspended for two years.
The remaining defendants received 9 years custody each.
Counsel instructed on our client’s behalf was Tom Price QC and Ian Bridge.
Simon Morgan of Kangs Solicitors was retained as the lead solicitor on the case for a period of 5 years in total.
Contact our Tax Investigation Solicitors | Kangs Solicitors
We welcome enquiries from corporate entities or individuals facing a tax investigation or a fraud allegation.
Our team of experienced solicitors is ranked in both the Legal 500 and Chambers & Partners for this area of work.
Hamraj Kang is ranked as one of only two ‘star individuals’ in the country by Chambers & Partners for his work in the area of fraud/tax investigations and white collar crime.
We endeavour to make the process simple and easy to understand for our clients as we appreciate that this can be a complex and confusing area of law for many people.