HMRC arrested advisor on day of client's tribunal

HM REVENUE & CUSTOMS officers arrested a tax advisor on the day he was due to give evidence in a capital gains tax tribunal only for the charges to be dropped, it has emerged.

Watkin Gittins of Montpelier Tax Consultants was representing Brian and Doreen Foulser in a long-running dispute over holdover relief from capital gains tax. The courts found in principle that the couple was liable to pay tax on £27m worth of shares, which was sent to the first-tier tribunal to determine.

However, on the day of the tribunal hearing, 27 September 2010, Gittins was arrested on suspicion of cheating the Revenue and false accounting. He was also asked to hand over his briefcase and his premises were searched, according to newly released court papers. He was released the same day without charge and no charges have been brought against him since. In January, Gittins took the Central Criminal Court to the High Court for granting the warrants. The High Court found that the Central Criminal Court and HMRC had acted fairly.

The Foulser case was adjourned on 27 September and the appellants made an application to remove HMRC from the proceedings based on its "serious misbehaviour", which would have the effect of allowing their appeal.

The Foulsers said that HMRC had obtained sight of legally privileged and confidential material held by Gittins relevant to the hearing. They also claimed that HMRC had arrested Gittins for the purposes of: alerting the tribunal hearing to the arrest and detention; causing the postponement of the hearing; causing publicity to the arrest of Gittins and thus embarrassing the appellants; and "oppressively" placing pressure on them.

The details emerged during a procedural hearing on 22 September 2011 to decide whether the first-tier tribunal had the jurisdiction to debar HMRC from making representations. Judge Roger Berner dismissed the application to disbar HMRC. He decided that it did not have this power and another court would have to make the decision whether to allow HMRC to make representations.

A representative of Gittins said the procedural decision was going to be appealed so it would be inappropriate to comment further.