Jonathan Edward Peter Tipper v The Crown Court at Birmingham
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Ellenbogen DBE |
| Judgment Date | 18 October 2022 |
| Neutral Citation | [2022] EWHC 2615 (Admin) |
| Docket Number | Case No: CO/3638/2020 & CO/3640/2020 |
| Court | Queen's Bench Division (Administrative Court) |
The King (on the Application of)
and
The King (on the Application of)
and
[2022] EWHC 2615 (Admin)
Mrs Justice Ellenbogen
Case No: CO/3638/2020 & CO/3640/2020
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT, BIRMINGHAM
Birmingham Civil Justice Centre
33 Bull Street, Birmingham, B4 6DS
John Hardy KC (instructed by Withers LLP) for the Claimant
Andrew Bird KC (instructed by HMRC Solicitor's Office and Legal Services) for the Interested Party
Hearing dates: 3 November 2021
Approved Judgment
Introduction
So far as now pursued, the Claimants make two applications, in separate but related proceedings, for permission to apply for judicial review. The decisions challenged are, respectively, those of:
a. the Crown Court, at Birmingham (HHJ Carr), on 2 July 2020, to issue:
i. special procedure warrants, under section 9 of and schedule 1 to the Police and Criminal Evidence Act 1984 (‘PACE’), permitting the search of the Claimants' premises for material likely to constitute relevant evidence in criminal proceedings; and
ii. search and seizure warrants, under sections 352 and 353 of the Proceeds of Crime Act 2020 (‘ POCA’), to search the Claimants' premises and to seize material likely to be of substantial value to a confiscation investigation; and
b. Birmingham Magistrates' Court (DJ Murray), dated 6 July 2020, to issue:
i. ‘prior approvals’, under s.303E of POCA, to search for ‘listed assets’ under s.303C POCA; and
ii. ‘appropriate approvals’, under s.47G of POCA, to search for and seize ‘realisable property’ from premises, persons or vehicles, under sections 47C to 47F of POCA.
A separate application is made to set aside or vary part of the order of Lang J, made on the papers on 30 March 2021, so as to permit the broadening of the principal applications to encompass a challenge to two further decisions of Birmingham Magistrates' Court, (DJ MacMillan) each made on 10 July 2020, whereby he extended the period of detention of certain ‘listed assets’, under section 303L of POCA. By her order (so far as material), Lang J refused the Claimants' application, dated 11 November 2020, to amend the claim forms and statement of facts and grounds, as constituting an improper attempt to extend the scope of the claims to include actions which extended beyond the decisions challenged by the claim forms, for which the Claimants had alternative statutory remedies and which had been made out of time.
The warrants and approvals under challenge were executed in simultaneous operations at the homes of, and other premises associated with, the Claimants, on 8 July 2020. At the same time, restraint orders granted by the Crown Court were served on the Claimants and certain other family members, as well as on a company. Broadly stated, it is the Claimants' contention that the relevant warrants and approvals were obtained by the Interested Party, HMRC, in breach of the duty of candour which attached to the making of its without notice applications and, in relation to the application made under PACE, in circumstances in which the court could not be satisfied that the condition imposed by paragraph 14(d) of Schedule 1 to that Act obtained. The broader challenge which they seek to advance by amendment asserts that the Magistrates' Court lacked jurisdiction to make the decisions which it made on 10 July 2020, having been misled as to the timing of the earlier seizures of listed assets, and, accordingly, authorised a further period of detention which was unlawful.
The Claimants' criticism is expressly directed at the allegedly inaccurate and/or incomplete basis on which each application was advanced before the relevant court and not at the relevant courts, which, in the ordinary way, have declined to participate in these proceedings. Before me, the Claimants were represented by Mr John Hardy KC and the Interested Party by Mr Andrew Bird KC. I am grateful to them both for their clear and thorough submissions, including those advanced in writing subsequent to the hearing.
Summary of the factual background
For current purposes, it is necessary to summarise the background to this matter only in broad terms, though I have been provided with, and considered with care, a wealth of material, including the amended witness statements of: the First Claimant, dated 22 April 2021 and its exhibit; the Fourth Claimant, dated 24 April 2021; and the Fifth Claimant, also dated 24 April 2021. Subsequent to the hearing, on 5 November 2021, I was provided, by the Claimants, with an additional bundle and explanatory note and, by the Respondent, with the two further detention orders which had been made on 10 July 2020; on 21 January 2022, by the Claimants, with the witness statement of David Donovan, investigating officer in HMRC, dated 26 April 2021 and prepared in connection with a different, related investigation, together with an explanatory note; and, on 2 February 2022, with HMRC's response to that material.
As at the date of the hearing before me, none of the Claimants had been charged with any offence. The written applications for the warrants and approvals the subject of challenge identified fraudulent evasion of VAT, cheating the public revenue, fraud by false representation, money laundering, and conspiracy to commit those offences as being the offences the subject of a criminal investigation, named Operation Salmon. The focus of that investigation was a fraud believed to have had at its centre Backoffice One Limited, of which the First and Third Claimants were each fifty percent shareholders and former directors and the Fifth Claimant was a current director, appointed on the date on which the First and Third Claimants had resigned their directorships; 1 August 2017.
The essence of the case under investigation is that a legal tax avoidance vehicle has been used for a criminal purpose, resulting in a loss to the Exchequer of a sum in excess of £85,200,000. HMRC believes that outsourcing companies made false claims of input tax in respect of sham sourcing companies which were not genuine trading entities but had been created in order to perpetrate a fraud. To quote from paragraph 10 of the Claimants' Amended Statement of Facts and Grounds, dated 26 April 2021, ‘Put in elementary terms, according to HMRC the male Claimants were ‘rigging the books’, and the fourth and sixth female Claimants were enjoying the proceeds of their husbands' misdeeds.’ Each of the Claimants denies any criminal activity.
In or about July 2012, the First and Third Claimants had founded a company which provided outsourced labour and associated administrative services. Temporary employees were supplied to employers through, or by, employment agencies all of the payroll responsibilities for whom were undertaken by that company. By 2017, the business had evolved into a corporate structure comprising a number of companies, each of which said to be engaged in particular activities undertaken by the business. The Fifth Claimant had joined as Chief Financial Officer in December 2015. In essence, HMRC alleges that the business was operated in an unlawful manner, resulting in the non-payment of the substantial sum previously mentioned.
The Claimants say that the structuring and operation of the corporate group had necessitated the taking of much legal and accounting advice, requiring regular liaison with HMRC. To HMRC's knowledge, in January 2016 they had appointed Mazars LLP, initially to assist with a civil investigation by HMRC and, subsequently, as their tax advisors and auditors. Mazars, together with solicitors, Shakespeare Martineau, had instructed leading counsel to advise in relation to the proposed business model and its potential tax implications. In March 2016, Mazars had provided tax advice on a proposed restructure. Mr Tipper (whose evidence is adopted by Messrs Foulsham and Cleary) states that, following advice received from leading counsel, his understanding was that the proposed business model was sound, from a tax perspective. At paragraph 50 of his witness statement, he states:
‘The detail of the advice is complex and impossible to summarise here for the purpose of this witness statement. However, what is clear is that we obtained detailed advice on our business model, and specific tax elements of that model, over a period of time from professional advisers including Leading Counsel. This was because we wished to ensure that our business model was fully compliant with all applicable tax legislation.’
Following the conclusion of enquiries by HMRC's civil enforcement division into the affairs and dealings of two of the principal companies (Abacus Outsource Ltd (‘Abacus’) and MyPay Accountants Ltd (‘MyPay’)) and associated companies, on 18 January 2019 HMRC launched its criminal investigation into the Claimants' business dealings (Operation Salmon). On the Claimants' case in these proceedings, there was no apparent connection between the conclusion of the civil enquiries and the commencement of the criminal investigation. Abacus and MyPay went into members' voluntary liquidation, for the purposes of an asset sale and subsequent company restructure. The liquidators drew up final accounts for both companies, respectively dated 31 January and 20 September 2019, which showed that HMRC had given clearance for each company to be wound up and, in the case...
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