Regina v Charlton, Cunningham, Kitchen and Wheeler. Court of Appeal, Criminal Division [1995]

DOIhttps://doi.org/10.1108/eb027187
Pages197-208
Publication Date01 January 1999
AuthorMartyn Bridges,Paul Atkinson,Robert Rhodes,Rowan Bosworth‐Davies
SubjectAccounting & finance
Journal of Money Laundering Control
Vol.
2 No. 3
ANALYSIS
Regina v Charlton, Cunningham, Kitchen and
Wheeler
Court of Appeal, Criminal Division [1995]
Martyn Bridges, Paul Atkinson, Robert Rhodes and Rowan Bosworth-Davies
INTRODUCTION
The case involved four accountants, a barrister and
12 separate tax 'avoidance' schemes. The account-
ants and the barrister were charged on an indict-
ment with 14 counts of cheating1 the public
revenue by falsely representing that the apparent
purchases by the UK companies were
bona
fide
commercial transactions.
The case was tried at Nottingham Crown Court
before His Honour Judge Benson and a jury. It
commenced in February 1994 and concluded on
1st August, 1994. The Crown's case against the
defendants was based on the assertion that the
accounts presented to the Inland Revenue by the
UK companies were false in that by using the
schemes to transfer part of their profits offshore
they were not in fact disclosing the full amount of
the profits they had made. It was this lack of dis-
closure which formed the basis of the false repre-
sentations alleged in the indictment.
The appeals against the convictions came before
the Court of Appeal, Criminal Division and were
heard between 20th January and 2nd February,
1995,
before Farquharson LJ, Hidden J and Long-
more J.
The judge's summing up in the Crown Court
took three days or more but no transcript has been
published. This article has therefore been prepared
using the published judgment given by Lord Jus-
tice Farquharson and delivered on 22nd February,
1995,
dismissing the appeals against the convic-
tions as reported in Tax Cases 67 TC 500 and
Simons Tax Cases [1996] STC 1418.
Following the dismissal of the appeals against
the convictions, leave was given for appeals against
the sentences and judgment was given on the same
day by Farquharson LJ reducing the sentences.
This article is not concerned with the Tightness
or otherwise of the convictions, and no judgments
of any kind, professional, moral or otherwise, are
intended or should be inferred in relation to the
defendants, their clients or in respect of the Inland
Revenue's decision to prosecute. What this article
is concerned with is the nature of the activities
which the prosecution alleged had been under-
taken, the application of the criminal law to those
activities and the nature and considerations of the
criminal process in the context of the diminishing
distinction between artificial tax avoidance and
criminal tax evasion.
THE TAXPAYERS
As far as the authors are aware, no criminal pro-
ceedings were brought against any of the taxpayers
who used the scheme. Indeed, Farquharson LJ
noted that '... unusually perhaps for a fraud of
this scale, there was no loss to the public purse, in
the sense that apart from one company the tax that
was due, as a result of this defrauding of the
Revenue, has now all been repaid as well as penal-
ties and interest'. The taxpayers' professional advis-
ers were not so lucky.
THE PROFESSIONALS
Christopher Robert Charlton ('Charlton') had
practised for many years as an unqualified account-
ant and was a partner in a firm of accountants
called Charltons which had offices in Derby, Bir-
mingham, Manchester and Jersey.
Charltons were the auditors of all of the UK
companies referred to in the indictment except one
which was audited by Farmiloe, a firm of chartered
accountants. Charltons (Jersey), later called
Kitchen & Co., was run by Terence Kitchen and
Page 197

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