THE CHIEF EXECUTIVE and a former director of the tax specialist arm of financial group Montpelier have been cleared of cheating the public revenue of £1m, after HM Revenue and Customs (HMRC) dropped the case against them.
Watkin Gittins, chief executive of Montpelier Tax Consultants, and Martin Calcutt, a former director at the firm, had been charged with the offence in respect of a £1m charity relief tax scheme.
However as the trial was reaching the end of its second week at Liverpool Crown Court, the prosecution asked the judge to direct the jury to acquit both men after deciding to offer no further evidence against them, reported sister publication Professional Adviser.
A formal verdict of not guilty was entered by the jury and the case came to an end.
The criminal investigation into the tax side of the business started in 2007 and involved high profile raids at Gittins’ offices in the Isle of Man and in London in September 2010.
This had the immediate effect of shutting down Montpelier Tax Consultants, and, according to lawyers for Gittins, hit the reputation and business of Montpelier Chartered Accountants, a top 50 UK firm.
Four different tax avoidance plans developed by Montpelier were investigated by HMRC, though charges were brought only in respect of one.
This plan involved taxpayers making gifts of gilts to a charity with an option to a trust to buy those gilts for a nominal sum, achieving a tax saving for the taxpayer and producing a fee for the charity.
The plan was closed down by HMRC in July 2004, by which point a number of tax payers had taken advantage of it.
Mark Spragg of Keystone Law who acts on behalf of Gittins said this saved the charity in question “from complete financial failure”.
“HMRC tried to argue that in relation to two only, out of a large number of taxpayers using the plan, Mr Gittins knew that the claim to tax relief was fraudulent, even though he had no part in the drafting or submission of the individual’s tax returns,” said Spragg.
He added: “The jury’s verdict came after the evidence demonstrated that the taxpayers’ returns were, in fact, accurate – which was precisely the position as Mr Gittins had always understood it.”
Spragg said the decision by HMRC and the Crown Prosecution Services (CPS) to drop the case was an “humiliating climb-down”, which ends a “long running, and ultimately futile investigation”.
“The only consequence has been the closure of a legitimate tax planning business and the loss of the jobs of the ordinary individuals employed by it,” he said.
Gittins will now consider with his legal team what options are open to him to obtain recourse, Spragg said.
Montpelier is currently ranked 62 in Accountancy Age’s Top 50+50 league table of firms, with £9.63m in fee income.
The Montpelier Group of companies included an independent financial advice and investment arm, as well as a tax planning business, Chartered accountancy, a mortgage division and pension trustee services.
Montpelier’s advice and investment businesses are no longer authorised.
The Financial Conduct Authority (FCA) banned Kevin Wells, the managing director of Montpelier Pension Administration Services, last April.
The censure was for allowing a high proportion of non-standard investments into the SIPPs it managed, without the necessary controls or capital resource, exposing customers and the company itself to a significant level of risk.
Curtis Banks bought the SIPP business in 2011.
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