Wednesday, December 09, 2009

British businessman sentenced to jail for tax fraud despite judge's doubts

A judge has sentenced a businessman at the centre of a fraud case to 3½ years in jail despite admitting the existence of fresh evidence that casts doubt on the safety of his conviction. Lawyers for Philip Bowles, who claim his ability to defend himself was impaired after his assets were frozen by the courts, were seeking his release on bail yesterday, pending an urgent appeal against his conviction for cheating Revenue & Customs.

Bowles, 60, was imprisoned amid extraordinary scenes at Oxford Crown Court on Monday evening, as Judge Anthony King publicly wavered over jailing him. Defence lawyers had asked the judge to avoid a “grave injustice” by taking the unprecedented step of sending the case to the Court of Appeal before passing sentence. That request was rejected. An appeal would centre on a forensic accountancy report, which claims that far from owing taxes, Bowles’s companies were due a refund.

The defence said the report, which was not seen by the jury that convicted Bowles, should trigger a retrial. The judge admitted that he was concerned about putting a man “in a place where he should not be if he is not guilty”. He added: “I am loath to let this matter drag on but equally I am loath to put a man in prison if he shouldn’t be there. That is the dilemma.”

Bowles was convicted by a jury in June of cheating the Revenue of £1.2 million in VAT but sentencing had been adjourned on three previous occasions. He had been found guilty of failing to pay VAT on a BIG land sale and diverting money due to the taxman to prop up Airfreight Express, his ailing air-freight company.

It was not suggested that Bowles, who has no criminal record, had used the money to fund a luxury lifestyle. Nevertheless, when the Revenue began a criminal investigation into his affairs in 2006 all his assets were frozen under the powers of the Proceeds of Crime Act. Bowles was required to live on an allowance and rely on legal aid for his defence rather than pay out of his own resources. Defence lawyers claimed that preparation of Bowles’s defence case was hampered further because his companies’ financial records were in the hands of administrators.

The accounts were not disclosed until a court hearing in February this year, at which point Bowles sought permission to have a forensic accountant examine them to determine the VAT position. He was refused a relaxation of the restraint order to pay for a forensic accountants’ report. The Legal Services Commission also declined to fund such a report from legal aid.

After the court was told that the records “could be considered by counsel with a calculator” the trial went ahead. Bowles was cleared of two charges but found guilty of a third. A financial report has since been prepared, free of charge, by a firm of chartered accountants. A draft copy was presented to the judge two months ago and a full version handed to him this week. Its analysis concludes that rather than owing tax, Bowles’s companies had actually overpaid their taxes. The report stated: “In our opinion, none of the evidence points to Philip Bowles fraudulently evading or concealing VAT due to HMRC ... It would have been reasonable to conclude that no fraud has taken place.”

Lawyers for Bowles claimed in court that matters were compounded by a failure to explain VAT law properly. They alleged the jury were wrongly informed that companies in the same group could not asssign tax liabilities and credits between each other.

William Clegg, QC, for the defence, told the sentencing hearing that the accountant’s report was “credible and admissible” and should be considered by a jury. Mr Clegg acknowledged that his request to send the case to the Appeal Court before sentencing was unprecedented. He said, however, that it would be “a real injustice” to imprison someone in the knowledge that “there was fresh evidence yet to be considered which could potentially give rise to the overturning of the conviction and a new trial”.

Mark Bryant-Heron, for the prosecution, told the judge that new material could be considered only by the Court of Appeal and he had to proceed to sentence according to established legal procedure.

Despite conceding the potential impact of the new evidence, the judge jailed Bowles and ordered him to pay £130,000 in prosecution costs. A confiscation hearing will follow next year. The judge told Bowles he had deliberately evaded paying tax that he knew was due and was guilty of “a very serious cheat”.

Peter Avery, assistant director of HMRC Criminal Investigations, welcomed the sentence, saying: “This sentence will serve as a deterrent to anyone who thinks that tax fraud is a risk worth taking.”

Original report here

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