R v Allen
| Jurisdiction | England & Wales |
| Judge | LORD BINGHAM OF CORNHILL,LORD NICHOLLS OF BIRKENHEAD,LORD STEYN,LORD HUTTON,LORD SCOTT OF FOSCOTE |
| Judgment Date | 11 October 2001 |
| Neutral Citation | [2001] UKHL 45 |
| Date | 11 October 2001 |
| Court | House of Lords |
[2001] UKHL 45
Lord Bingham of Cornhill
Lord Nicholls of Birkenhead
Lord Steyn
Lord Hutton
Lord Scott of Foscote
HOUSE OF LORDS
My Lords,
I have had the benefit of reading in draft the opinion of my noble and learned friend Lord Hutton, with which I am in full agreement. For the reasons he gives I would dismiss this appeal.
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hutton. For the reasons he gives I too would dismiss this appeal.
My Lords,
I have read the opinion of my noble and learned friend Lord Hutton. For the reasons he gives I would also dismiss the appeal.
My Lords,
The appellant, Brian Roger Allen, was charged before His Honour Judge Hordern and a jury in the Crown Court at Knightsbridge on 13 counts of cheating the public revenue of income tax and corporation tax. He was convicted on 19 February 1998 on all counts and on 20 February he was sentenced to 13 concurrent terms of seven years' imprisonment. A confiscation order was made against him pursuant to section 71 of the Criminal Justice Act 1988 in the sum of £3,137,165 with a consecutive term of seven years' imprisonment in default.
Each of the first seven counts charged the same offence of cheating the public revenue of corporation tax by concealing and/or otherwise failing to disclose the existence of profits made by an offshore company, which was managed and controlled by the appellant in the United Kingdom. Count 1 was as follows:
"STATEMENT OF OFFENCE
Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law.
PARTICULARS OF OFFENCE
BRIAN ROGER ALLEN, between 1 January 1980 and 31 March 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely corporation tax, by concealing from and/or otherwise failing to disclose to the Commissioners of Inland Revenue for the purposes of the Taxes Acts the existence of profits made by an off-shore company, namely Meldrette Investments Ltd, which was managed and controlled by him in the United Kingdom during the said period."
Counts 2 to 7 charged the same offence in relation to six different offshore companies.
Counts 8, 9, 10, 12 and 13 charged the same offence of cheating the public revenue of income tax by delivering and/or causing to be delivered a tax return for a particular year showing income which was false, misleading and deceptive in that it omitted to declare all the income and benefits which the appellant received during that period.
Count 8 was as follows:
"STATEMENT OF OFFENCE
Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law.
PARTICULARS OF OFFENCE
BRIAN ROGER ALLEN, on or about 3 April 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely income tax, by delivering and/or causing to be delivered to an Inspector of Taxes a tax return for the year 1989/1990 showing income for the year to 5 April 1989 in respect of himself which was false, misleading and deceptive in that it omitted to declare all the income and benefits which he received during the said period.
Particulars of omitted income and benefits are - income and benefits received from:
(i) Peche D' Or Investments Ltd;
(ii) Meldrette Investments Ltd."
Count 9 related to the year 1990/1991, count 10 related to the year 1991/1992, count 12 related to the year 1992/1993 and count 13 related to the year 1994/1995. Counts 9 and 10 related to the omission of income and benefits received from (i) Peche D' Or Investments Ltd and (ii) Meldrette Investments Ltd. Count 12 related to the omission of income and benefits received from (i) Peche D' Or Investments Ltd, (ii) Meldrette Investments Ltd and (iii) Berkshire Investments Ltd. Count 13 related to the omission of income and benefits received from Peche D' Or Investments Ltd.
The Crown case against the appellant on counts 1 to 7 was that he had dishonestly concealed the fact that he managed and controlled in the United Kingdom the businesses of the respective companies specified in those counts in order to give the false impression that the companies were not resident in the United Kingdom so as to avoid corporation tax being charged against those companies.
The Crown case against the appellant on counts 8 to 10 and 12 to 13 was that the appellant concealed the provision of living accommodation and benefits received from the offshore companies for which he was liable to income tax as a shadow director.
Count 11 was as follows:
"STATEMENT OF OFFENCE
Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law.
PARTICULARS OF OFFENCE
BRIAN ROGER ALLEN, on or about 3 April 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely income tax, by delivering and/or causing to be delivered to an Inspector of Taxes a schedule of assets as at 31 January 1991 in respect of his assets and the assets of his minor children which was false, misleading and deceptive in that it omitted to disclose divers assets which were owned by him.
Particulars of the omitted assets are - his beneficial interest in shares issued by off-shore companies, his beneficial interest in properties held in the names of off-shore companies, and his beneficial interest in bank accounts held in the United Kingdom and in Jersey in the names of off-shore companies."
The appellant appealed against his convictions to the Court of Appeal on a number of grounds, and his appeal was dismissed and the convictions affirmed [2000] QB 744. One ground of appeal advanced before the Court of Appeal and rejected by it was that under section 739(2) of the Income and Corporation Taxes Act 1988 the income of the offshore companies was deemed to be the income of the appellant and that the income was also deemed not to be the income of those companies. In consequence none of the companies was liable to any corporation tax as the income was not their income and therefore the appellant's dishonesty could not have caused any loss to the revenue and he could not be guilty of the offence of cheating the revenue.
In respect of this issue the Court of Appeal certified the following point of law:
"Whether section 739(2) of the Income and Corporation Taxes Act 1988 has either of the additional effects, in relation to income which it requires to be deemed to be income of an individual ordinarily resident in the United Kingdom
a) of requiring, for corporation tax purposes, that same income to be deemed not to be the income of a company incorporated outside the United Kingdom whose income it actually is;
b) of requiring for income tax purposes, that same income to be deemed not to be the income of the person (whether an individual or a company) resident or domiciled outside the United Kingdom whose income it actually is".
The appellant's appeal was heard together with the appeal of Dermot Jeremy Dimsey who had administered on behalf of the appellant the offshore companies (and their bank accounts) specified in the indictment against the appellant and who had been convicted of the offence of conspiracy to cheat the public revenue. On the appellant's appeal before this House his counsel, Mr Newman QC, adopted the argument of counsel for Dimsey, Mr Venables QC, on the section 739(2) point. For the reasons given in the speech of my noble and learned friend Lord Scott of Foscote in the case of Dimsey, with which I am in full agreement, I would reject the appellant's ground of appeal in relation to section 739(2).
The shadow director point
Another ground of appeal advanced before the Court of Appeal and rejected by it was that as a shadow director the appellant was not liable to tax in respect of the provision of living accommodation and benefits in kind. In respect of this issue the Court of Appeal certified the following point of law:
"Whether section 145 and/or section 154 of the Income and Corporation Taxes Act 1988 impose a charge to tax under Schedule E in respect of relevant benefits received from a company by an individual who, while having no actual office or employment with that company, none the less falls within the extended meaning of 'director' under section 168(8) of the Act."
Under the provisions of Chapters I and II of Part V of the Income and Corporation Taxes Act 1988 (the ICTA) where, by reason of his employment, a person is provided with living accommodation or he or members of his family or household are provided with benefits in kind, the value of the accommodation or the cash equivalent of the benefits is to be treated as emoluments of his employment for the purposes of Schedule E.
Section 145(1) in Chapter I provides in relation to the provision of living accommodation:
"Subject to the provisions of this section, where living accommodation is provided for a person in any period by reason of his employment, …, he is to be treated for the purposes of Schedule E as being in receipt of emoluments of an amount equal to the value to him of the accommodation for the period, less so much as is properly attributable to that provision of any sum made good by him to those at whose cost the accommodation is provided."
Section 145(8) provides:
"For the purposes of this section...
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Subject Index
...75–101R v Abbott [2003] EWCA Crim 350 . 111R v Adams [1997] Crim LR 292 ........ 113R v Agar [1990] Crim LR 183 ............123R v Allen [2001] UKHL 45, [2002] 1 AC509..................................................... 43R v Arp (1998) 129 CCC (3d) 321, [1998]3 SCR 339, SCC ....................
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