Harry Redknapp and Milan Mandaric have walked free after a jury found them not guilty of tax evasion (posh term ‘cheating the public revenue’). My national BBC interview about the fall-out from the case is at www.YouTube.com/HustonTV
This means Redknapp’s dog Rosie – if she’s still around – can stop biting her claws. She was accused of being the tax-fiddling dog as the Monaco bank account was opened by Redknapp in her name, after he flew to Monaco to open it.
This case and its ending is an embarrassment for HMRC and raises the following questions:
- Why did HMRC spend a fortune bringing this prosecution?
- What singled Redknapp out for prosecution?
- Should HMRC stop these high-profile tax prosecutions?
Why did HMRC spend a fortune bringing this prosecution?
They don’t take many suspected tax-fiddlers to court. In fact the vast majority – over 99% are settled quietly with a payment of tax, interest and penalties. Many high profile people have paid up for large tax investigations in the past and the matter has been kept secret due to taxpayer confidentiality. Under new legislation there will be public naming of people who fiddle more than £25,000 in tax, but those names are yet to start appearing, as the law is fairly new.
This case was taken as HMRC was given information which came out of the larger Police investigation into bungs and bonuses in British Football. It is said that the big investigation cost some £8 million.
Information also from HMRC’s key witness – journalist Rob Beasley – suggested the money lodged offshore was a bonus. In Court Harry Redknapp said that he had lied to the journalist but was telling the truth to the Court.
What singled Redknapp out for prosecution?
The factors which would have meant HMRC thought they had a strong case included:
- Redknapp had not admitted to the account in a previous tax investigation. (Most tax prosecutions are people who withheld information in a previous investigation.)
- He had gone out of his way to set up the account. He flew to Monaco and set it up in a false name – his dog’s. The Account was named Rosie 47. (Harry was born in ’47.) There’s rarely an innocent motive for such behaviour.
- HMRC had the evidence of the taped conversation with the journalist admitting the lodgements were bonuses.
- With falling tax payment figures, HMRC may have been keen to have a high-profile tax prosecution – to encourage others to come clean.
Unfortunately juries are fickle things, and HMRC called it wrong on this one.
Should HMRC stop these high-profile tax prosecutions?
Interesting question. For my part I don’t think they should stop them but they need to go into Court knowing these cases are different. They need to use Celebrity lawyers ready to fight the case on the soft woolly aspect of the case, not just the boring numbers stuff.
Redknapp used what I call ‘The Celebrity Defence’. He basically said ‘I’m a simple man, don’t really understand these things...I leave it all to my accountant’.
This defence was used in the last big-name tax court case – the tax prosecution of comedian Ken Dodd – way back in 1989.
The only other big name to be publicly done for tax evasion in my 25 years in tax was Lester Piggott – the jockey. He was found to have evaded tax on millions, using false names and overseas bank accounts.
So – 25 years – 3 big-name prosecutions. Not very many. And certainly not enough for the general population to get the HMRC message.
HMRC wants people to believe that the big guys get caught too. Sadly with such numbers the man-in-the-street thinks HMRC is out to get him, and the big names get a light touch. Hard not to think that!
Now that Harry Redknapp can put this stressful case behind him at least he has something to take his mind off it. Does he want a new job managing England?
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.