BVI and Gibraltar facilitated offshore tax scams that resulted in 2 years imprisonment for UK developers

Two property developer brothers have been sentenced for stealing more than £3.2 million in an offshore tax scam. They were sentenced to two years in prison, suspended for two years, fined £20,000, and handed Director disqualifications.

Stephen Hirst, 62, and his brother Michael, 55, both from Yorkshire, used offshore companies in overseas territories to hide money from the sale of land in Wakefield to evade paying tax.

• Stephen Phillip Hirst, DOB 04/05/1962, of Marton Gate, Bridlington, was
• Sentenced to two years and suspended for two years for Cheating the Public Revenue contrary to Common Law.
• Fined £12,000 and
• Disqualified as a Director for eight years.
• Michael Hirst, DOB 27/03/1969, of Barnsley Road, Newmillerdam, Wakefield, was
• Sentenced to two years and suspended for two years for Cheating the Public Revenue contrary to Common Law.
• Fined £8,000 and
• Disqualified as a Director for eight years.

The Fraud

1. The Hirsts ran a property development firm called TIMS Investments Ltd based in Wakefield.
2. In 2007, they transferred a large plot of UK land in Wakefield to a company of the same name in Gibraltar. The Gibraltar-based company sold this land, which has since been developed into a housing estate, for £10.9 million.
3. The Hirsts managed and controlled the Gibraltar-based firm from the UK. The brothers were not registered as owners of the firm but controlled it via another company they owned in the British Virgin Islands, which was also named TIMS Investments Ltd.
4. They should have declared ownership of these companies and paid tax on the sale of the land – but they failed to do so and evaded £3.2 million in Corporation Tax in the process.
5. The men pleaded guilty to charges of cheating the public revenue on July 18, 2023, and at a court hearing in January 2024, asked for sentencing to be deferred to give them time to repay the money. The total was paid on June 4 2024.

Investigation and Sentencing

• During sentencing at Leeds Crown Court today (July 18), it was confirmed that the men had paid back the entire £3,247,613 and prosecution costs of £31,500.
• The pair had been given the chance to come clean about their tax affairs when HM Revenue and Customs (HMRC) began a civil tax investigation in 2013.
• They were offered the chance to pay what was owed plus a penalty through a formal civil process known as a Contractual Disclosure Facility (CDF) or a ‘COP9’.
• The COP9 process requires taxpayers to make a “full, open and honest” disclosure or face a criminal investigation.
• The men initially failed to respond and provided only partial information, resulting in a criminal investigation launched in November 2016.
• Investigators proved that the brothers controlled offshore companies in Gibraltar and the British Virgin Islands, which they used to facilitate the tax fraud.

Zoe Gascoyne, Deputy Director, Fraud Investigation Service, HMRC, said:

• “Stephen and Michael Hirst had numerous opportunities to be honest about their tax affairs.
• “Instead, they lied about the network of firms and ownership structures they had set up to commit fraud and have ended up with criminal convictions.
• “We are pleased to have recovered every penny of the money they stole, which will now be used on the public services we rely on.
• “We continue to work tirelessly to ensure the tax system is fair to all, and this case shows once again that we will work with international partners to ensure a level playing for all taxpayers.”

Andrew Fox from the Crown Prosecution Service said:

• “The defendants dishonestly manipulated the system and made every attempt to evade their tax liabilities.
• “The amount of unpaid tax was substantial and involved millions of pounds that should rightly have been paid into the public purse. We are pleased to have secured justice and the repayment of the tax.
• “Our specialist prosecutors will continue to work closely with investigators such as HMRC to prosecute tax fraud cases and bring perpetrators to justice.”

Footnotes

• Code of Practice 9 (COP9) is the civil investigation procedure HMRC follows to respond to tax fraud. It is HMRC’s primary tool for investigating cases of suspected tax fraud when a civil procedure is considered the most appropriate action.
• Under the investigation of fraud procedure, the recipient of COP9 is allowed to make a complete and accurate disclosure of all their deliberate and non-deliberate conduct that has led to irregularities in their tax affairs https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1168681/COP9_06_23.pdf
• The Contractual Disclosure Facility (CDF) is part of the process used to deliver COP9. It is a contractual arrangement whereby HMRC undertakes not to investigate criminally in return for the customer’s full, open, and honest disclosure of all the tax fraud committed.

Source

https://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/pressreleases/brothers-sentenced-for-offshore-tax-scam-3294152