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Evidence points to guilt of former BHS boss

Service Area: Criminal and Regulatory, Fraud

Prosecutors in the recent trial of Dominic Chappell, who famously bought BHS for £1 from Sir Philip Green, used evidence from bank accounts, receipts, emails and interviews to persuade the jury of a guilty verdict for tax evasion.

The jury at Southwark Crown Court found Mr Chappell guilty of failing to pay tax of around £584,000 on more than £2 million of income he received after buying the failed high street chain.

The evasion related to a personal service company operated by Mr Chappell, the now liquidated Swiss Rock Limited, which received payments from Retail Acquisitions Limited, of which he was a director, for consultancy fees for his own advice on the purchase of BHS.

Chappell failed to submit VAT returns for a 17-month period from March 2015, evading £343,511 of tax. HM Revenue & Custom’s (HMRC) investigation revealed the company’s sales invoices totalled £2.3 million, meaning he was liable for £351,944 in VAT, but he paid just £8,433.

The businessman also paid just £10,000 of Corporation Tax when £164,064 was due to HMRC and neglected to notify HMRC of a £330,000 dividend paid to him through Swiss Rock Limited, which meant Income Tax on the dividend totalled £86,163.

He was convicted of all three counts of defrauding the public revenue out of VAT, Corporation Tax and Income Tax owed on fees paid to him and his now-bankrupt firm Swiss Rock in connection with his ownership of BHS.

According to the Crown Prosecution Service, he spent the money on a lump sum gift of £95,000 to his wife, a £185,000 yacht, a Bentley and a holiday in the Bahamas.

Mr Chappell bought the chain for £1 in March 2015. The company collapsed 13 months later with the loss of 11,000 jobs and a pension fund deficit of £571 million.

A spokesman for the Crown Prosecution Service said that using evidence gathered by HMRC’s Fraud Investigation Service, it was able to show the jury that Mr Chappell simply chose not to pay large amounts of tax which were due.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “It is notoriously difficult to persuade juries to convict those accused of tax evasion in complex financial trials.  However in this case the evidence was clearly presented in a sufficiently compelling way to persuade the jurors of Mr Chappell’s guilt.

“Forensic accountants are experienced in laying out evidence in a way that is easy for laypeople, such as jurors, to understand.  Often, they use visual aids including graphs and diagrams to show how money has been moved from person to person or place to place.

Sadly a successful prosecution is seldom of much comfort to those who have been the victims of financial crime or, as in this case, those who have suffered indirectly by losing their livlihoods.”

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