Dennis Karl Horner v Trisha Anastasia Allison (formerly known as Anastasia St. Raphael) and Another
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Richard Seymour Q.C. |
| Judgment Date | 17 December 2012 |
| Neutral Citation | [2012] EWHC 3626 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ10X02720 |
| Date | 17 December 2012 |
[2012] EWHC 3626 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Richard Seymour Q.C.
(sitting as a Judge of the High Court)
Case No: HQ10X02720
Miles Croally (instructed by Hierons) for the claimant
The defendants in person
Hearing dates: 22, 23, 24, 25, 26, 30, 31 October, 1, 2, 5, 6, 9, 14, 16, 21, 22, 26, 27 November 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant, Mr. Dennis Horner, is, by qualification, a chartered accountant, although, as I understand it, he has never practised as such. He has actually practised as a management consultant and was, at the time of the events giving rise to this action, one of a number of managing directors of Atos KPMG Consulting Ltd.
In that capacity Mr. Horner earned significant amounts of money. In the Income Tax year 2000/2001 Mr. Horner actually paid income tax of £78,737.79, plainly the bulk of it at a marginal rate of 40%. In the following Income Tax year, 2001/2002, the income tax which he paid was even higher, totalling £113,361.50. In those two Income Tax years, therefore, Mr. Horner actually paid income tax totalling £192,099.29.
While the detail of the statutory provisions in question are not really material to any issue in this action, by Finance (No.2) Act 1992 s. 42, as amended, it was provided, inter alia, that:-
"(1) Subject to the following provisions of this section and any other provisions of the Tax Acts, in computing for tax purposes the profits or gains accruing to a person in a relevant period from a trade or business which consists of or includes the exploitation of films, that person shall (on making a claim) be entitled to deduct an amount in respect of any expenditure —
(a) which is expenditure to which subsection ( 2) or (3) below applies, and
(b) in respect of which no deduction has been made by virtue of section 40B above and no election has been made under section 40D above.
(2) This subsection applies to any expenditure of a revenue nature incurred by the claimant on the production of a film —
(a) which was completed in the relevant period to which the claim relates or an earlier relevant period, and
(b) the master negative of which or any master tape or master disc of which is a qualifying film, tape or disc.
(3) This subsection applies to any expenditure of a revenue nature incurred by the claimant on the acquisition of the master negative of a film or any master tape or master disc of a film where —
(a) the film was completed in the relevant period to which the claim relates or an earlier relevant period, and
(b) the master negative, tape or disc is a qualifying film, tape or disc."
The provisions of Finance (No.2) Act 1992 s.42 which I have quoted were modified by Finance (No.2) Act 1997 s.48(1) so as to substitute, for the original terms of Finance (No.2) Act 1992 s.42(4), this, as amended:-
"The amount deducted for a relevant period under subsection (1) above shall not exceed so much of the total expenditure incurred by the claimant on —
(a) the production of the film concerned, or
(b) the acquisition of the master negative or any master tape or master disc of it,
as has not already been deducted by virtue of section 40B or 41 above or this section."
So far as is presently material, the effect of these provisions was, in 2003, that it was permissible for a person participating in a trade or business which consisted of or included the exploitation of films, to deduct, in computing his or her income assessable to income tax, the amount of any investment of a revenue nature which he or she had made in the production or acquisition of a qualifying film. The practical effect of such entitlement to deduct was to reduce the amount assessable to income tax by the amount of the investment, producing a financial benefit worth the amount of the income tax which would otherwise have been payable on the sum invested.
This action was commenced by a claim form issued on 19 July 2010. In it Mr. Horner claimed, principally, damages against the first defendant, Miss Trisha Allison, and the second defendant, Mr. Adrian Ross, in respect of alleged fraudulent misrepresentation. The misrepresentations alleged were in relation to the opportunity to secure a reduction of Mr. Horner's tax liabilities by investing in films. The thrust of the misrepresentations was said to be that Mr. Horner, and others to whom the misrepresentations were said to have been made on the same occasion, could claim refunds on income tax already paid, invest the proceeds of the refunds in films, and recover a guaranteed return on the supposed investment of 20% of the amount of the investment. The apparent benefit to Mr. Horner was that he could recover an amount equal to 20% of the income tax which he had paid in the relevant years. A cynic might have thought that it all looked too good to be true. Someone who had taken that view would have been correct. Mr. Horner participated in the scheme which he said was put to him, and, in the first instance, a tax refund of £168,756.30 was obtained, of which £33,750 was retained by Mr. Horner. However, once the Commissioners of Inland Revenue ( "the Revenue") investigated the claim for a refund it came to the conclusion that Mr. Horner had not been entitled to any refund, and he was compelled to repay the refund, together with interest and penalties. The total which he had to repay came to £207,000. He paid that total to the Revenue by three instalments. The first, in the sum of £40,000 was made on 6 March 2006. The other instalments were of £100,000 on 22 July 2006 and of £67,000 on 6 December 2006.
The evidence of Mr. Horner
In a witness statement dated 23 November 2011 Mr. Horner gave this account of the circumstances in which he met Miss Allison, at that time using the name Anastasia St. Raphael, and Mr. Ross, and what then happened:-
"4. In January 2003, when I was a Management Consultant Partner with Atos KPMG Consulting, at the suggestion of a work colleague, Charles Gill (who, I have since discovered, was paid a commission by Taipan Creative LLP ("Taipan"), an entity formed and controlled by the Defendants, to make the suggestion) I attended a presentation on 13 January 2003 at the Institute of Directors in Pall Mall given by the Defendants who I will refer to as Allison and Ross. Charles also mentioned the presentation to a number of our work colleagues including Barry Cowing.
5. I had not previously met either Allison or Ross before. Allison introduced herself at the presentation as Anastasia St. Raphael. She has since changed her name to Trisha Anastasia Allison and she has provided documents during these proceedings to show that Anastasia St. Raphael was not her original name. She has confirmed that over the years she [has] been known by 4 different names and has changed both her first name and surname more than once. These changes to her surname have not come about because of marriage. In fact she has given evidence that she did not change her surname to that of her former husband whose surname was Potterton although the Second Defendant [sic — Miss Allison was in fact the first defendant] has produced copies of her son's birth certificates and these refer to her as Patricia Catherine Potterton and Catherine Patricia Potterton.
6. The presentation was attended by about 15 to 20 people. I believe that Barry Cowing also attended the presentation.
7. Allison and Ross distributed some written material. I believe that this was a document headed "A Unique Low Risk High Return Investment Proposition". The written material was collected up at the end of the presentation because we were given the impression that if we were not participating in the scheme that we should not keep the material and that as the regulations were about to change that the information contained in the handout would soon become out of date. This document later came into my possession from HMRC [H.M. Revenue and Customs, the successor to the Revenue]. Initially in his response to my claim Ross admitted that this document had been circulated at the presentation but he now seems to be denying that this was the case. Even if this document is not the one that was circulated at the presentation I believe that the handout circulated at the presentation was substantially similar and that this might be a later version.
8. Allison claimed that she was a tax specialist involved with film schemes. The gist of the presentation given by her, with the assistance of some power point slides, was that, by virtue of certain statutory tax relief provisions, it was possible to get a tax advantage by participating in certain schemes which invested money in the production of British films. Such schemes were called "film tax shelter schemes". Allison claimed that she and Ross had developed such a scheme which was particularly advantageous. From the way she described their scheme at the presentation, it did sound very advantageous. The key points of the scheme, as the [sic] she described it at the presentation, can be summarised as follows:
(1) Under the relevant statutory relief provisions. … the participants in the scheme (whom I shall call "investors") would be entitled to tax refunds of up to the whole amount of income tax paid by them in the last three years, i.e. tax years 2000/1, 2001/2 and 2002/3. Subject to (3) below, such refunds would have to be invested in the scheme in order for the investors to...
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