Gittins (R) v Central Criminal Court
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE GROSS,MR JUSTICE DAVIS |
| Judgment Date | 14 January 2011 |
| Neutral Citation | [2011] EWHC 131 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CO/11269/2010 |
| Date | 14 January 2011 |
[2011] EWHC 131 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION DIVISIONAL COURT
Before: Lord Justice Gross
Mr Justice Davis
CO/11269/2010
MR A JONES QC appeared on behalf of the Claimant
MISS C DOBBIN appeared on behalf of the Defendant
LORD JUSTICE GROSS: There are before the court applications on the part of both the claimants, to whom I shall generally refer for brevity as Mr Gittins save where the context otherwise requires, and the defendant to whom I shall refer as HMRC. Mr Gittins applies for permission to apply for judicial review and, if permission is granted, judicial review of the decision of HHJ Stephens QC of the Central Criminal Court on 24 September 2010 to issue two warrants for the search of premises at 17 to 19 Cockspur Street and 27 Montpelier Street. Mr Gittins also seeks judicial review of a decision to issue a notice pursuant to section 50 of the Criminal Justice and Police Act 2001 during the execution of one of the warrants on 29 September 2010 at 27 Montpelier Street.
For its part HMRC seeks the discharge of the interim order granted by HHJ Bidder QC sitting as a High Court Judge on 28 October 2010. No more need be said of the application concerning the injunction granted by HHJ Bidder QC. If Mr Gittins succeeds on the judicial review matter then he would be entitled to the return of the documents so that the injunction would be unnecessary; if HMRC succeeds then the injunction must go.
The matter was heard yesterday but concluded too late for judgment to be given then. Accordingly, judgment is being given this morning.
With regard to Mr Gittins and the other claimants I should say something. Mr Gittins is a resident of the Isle of Man and a fellow of the Institute of Chartered Accountants in England and Wales, having qualified in 1975. He says that he is the chairman and majority share holder of Montpelier Holdings LLC, which is a diverse financial advisory business consisting of over 50 companies operating in 10 countries with over 500 staff. Montpelier Holdings LLC is the ultimate parent company of the second and third claimants. Mr Gittins says that he is a director of both of them as well and he is also a director of many other companies in the group. He has been concerned with tax planning for 35 years, during which time he has been in almost constant correspondence with HMRC on numerous tax planning schemes for his clients.
The second claimant, which has operated since 1992, is registered in the Isle of Man and offers tax planning primarily to UK residents, both individual and corporate.
The third claimant, also registered in the Isle of Man, offers trust and corporate services to support these tax plans, and is licenced and regulated by the Isle of Man Financial Supervision Commission.
The second and third claimants operate from offices in the Isle of Man. The second claimant has various United Kingdom registered subsidiary companies which operate from 27 Montpelier Street. These companies are sales vehicles. There is also an office at 17 to 19 Cockspur Street. The offices at Cockspur Street are in multiple occupation, with Montpelier occupying the second and third floors and other businesses occupying the rest of the building.
Mr Gittins is resident in the Isle of Man but when he is in London he says that he stays at 27 Montpelier Street which he uses as an office.
Turning to HMRC's concerns in this matter, they are explained in a statement of a Mr Rawbone, an inspector of taxes within the Criminal Investigation Directorate, to which I shall refer as CI, within HMRC. Mr Rawbone says that he is presently the officer in charge of a criminal investigation into Mr Gittins and four tax plans promoted by him through the second claimant and various other companies owned by or associated with him. He is investigating the matter with a view to establishing whether or not criminal offences have occurred.
The tax plans concerned are known to HMRC as:
"Tax Plan 1" —Relevant Discounted Securities ("RDS tax plan");
"Tax Plan 2" —Capital Redemption Policies ("CRP tax plan");
"Tax Plan 3" —Contracts for Difference ("CFD tax plan");
"Tax Plan 4" —Gifting of Gilts ("charity tax plan").
The criminal investigation, Mr Rawbone says, involves indictable offences, namely cheating the Public Revenue contrary to common law and/or false accounting contrary to section 17 of the Theft Act 1968. According to Mr Rawbone, Mr Gittins is not the only suspect in the inquiry and it may extend to other individuals and companies.
The tax plans were brought to the attention of CI by the anti-avoidance group of HMRC which, together with specialist investigations, had opened civil enquiries into the tax returns of subscribers who had made claims to relief from tax under one or other of the plans. The aim of the civil enquiries was to determine whether or not the steps said to have been taken under the plans had the desired effect in law. Mr Rawbone comments on the implications of decisions in two similar schemes. Mr Rawbone goes on to say that the aim of the criminal inquiry was and is to determine whether or not the steps said to have been taken under the plans had in fact been implemented as the subscribers and HMRC had been led to believe.
On the basis of the information available at present, Mr Rawbone says that CI does not suspect the subscribers to the four tax plans of acting fraudulently. He speaks to the belief that Mr Gittins assured the subscribers that what was being done complied with the law and that he used advice he sought from counsel to support this. He says that, so far as is known, apart from signing documents the subscribers had little or no involvement in the actual implementation of the tax plans. Mr Rawbone underlines that since 16 February 2007 when the criminal investigation began, the civil enquiries into the four suspect plans have continued independently of the criminal inquiry and a "Chinese wall" has been maintained between them to protect the integrity of each.
The amount involved, according to Mr Rawbone, is substantial. Claims to relief from tax in excess of £554 million have been made in the tax years ending 5 April 2003 to 5 April 2008 by at least 651 subscribers to one or other of the four suspect tax plans. If repayments had been made or relief allowed in every case the estimated tax loss arising from the four plans we have would have been in excess of £97 billion. The majority of the repayments, however, were stopped when the civil enquiries into the tax returns of individual subscribers were opened.
Mr Rawbone goes on to explain HMRC's stance as to Mr Gittins. HMRC believes that Mr Gittins devised the four tax plans and controlled, directly or indirectly, all of the companies used in their implementation. Mr Rawbone says that Mr Gittins, through Consultants, had a direct interest in the success of the subscribers' claims in that, in addition to the initial fees, which are estimated to be £8.8 million for the four plans, Consultants was due to receive for three of them an additional success fee. This was to be calculated by reference to the tax saved or amount invested if and when HMRC agreed a particular claim and is estimated to be some £5.5 million. Thus, fees in excess of £14 million might be anticipated if the tax plans had been successful.
The criminal investigation has relied on cooperation with the authorities in the Isle of Man through letters of request. However, the two authorities —the authorities here and the authorities in the Isle of Man —have of course proceeded independently.
As to the nature of the fraud, emphasis is placed, if I have understood Mr Rawbone correctly, on matters which may shortly be described as fictitious loans. The matter is set out in some greater detail in Mr Rawbone's witness statement but it is unnecessary to take up more time on that aspect of the matter in this judgment.
I come next to the history of the proceedings. Search warrants were applied for and granted. On 24 September 2010 an application supported by an information was made, in the event to HHJ Stephens QC at the Central Criminal Court, by Mr Yates, an officer of HMRC, for the grant of two warrants to enter and search premises. These applications were made pursuant to the provisions of section 9 and paragraph 12 of schedule 1 of the Police and Criminal Evidence Act 1984 ("PACE"). The premises were 17 to 19 Cockspur Street SW1, and 27 Montpelier Street SW7.
The investigation into Mr Gittins by HMRC, as has already been noted, involved cooperation with the authorities on the Isle of Man. The warrants issued by HHJ Stephens QC were executed on 29 September 2010. Independent counsel were present at both sets of premises for the express purpose of advising on issues of legal professional privilege ("LPP") which might arise. The warrant issued in the Isle of Man was executed on the same date. In the event, Mr Gittins was arrested at the Montpelier Street premises and interviewed under caution on 29 September 2010. He was bailed to return to Notting Hill Police Station. Understandably, and as is recounted in the statement of facts, Mr Gittins was shocked by the arrest and found it most disconcerting.
In the course of the searches various notices were issued by HMRC officers pursuant to section 50 of the Criminal Justice and Police Act 2001 ("the 2001 Act") giving additional powers of seizure in respect of various computers at 27 Montpelier Street....
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