The former deputy managing director at Vantis Tax Ltd has been found guilty of trying to defraud taxpayers of £70m in a scheme designed to exploit the rules on giving shares to charity.

Blackfriars Crown Court heard that David Perrin, who had worked for the former Inland Revenue in the late 1980s and early 1990s, devised and operated the tax avoidance scheme which he sold to wealthy taxpayers between 2005 and 2006.

Perrin used a network of finance professionals to advise more than 600 clients to buy shares, worth a few pence each, in four new companies he had set up. He then listed the companies on the Channel Islands Stock Exchange and paid people money from an offshore account to buy and sell the shares simply to inflate their price.

The share owners then donated 329m shares to various unsuspecting registered charities and tried to claim £70m tax relief on a total of £213m of income and company profits. This was based on the shares being worth up to £1 each, rather than the pennies they were originally bought for. Perrin also used the bogus scheme to claim money back.

As a result, the court was told, Perrin pocketed more than £2m in fees from the unsuspecting clients which he spent on expensive second homes, exotic holidays, works of art and luxury cars.

The scheme proved so popular that Vantis employees performed a celebration song at the firm’s annual conference to the tune of Gloria Gaynor’s hit disco single I will survive. It included the verse: ‘They should have changed that stupid law, they should have buggered charity, but they have left that lovely tax relief, for folks to pay to me.’

Jim Graham, HMRC criminal investigator, said: ‘With his knowledge of the tax system, Perrin thought that he was one step ahead of both HMRC and the law. This cynical fraud not only stole millions of pounds from taxpayers, but also conned innocent charities into accepting gifts of virtually worthless shares, just so Perrin could inflate his own criminal earnings.’

Perrin is due to be sentenced on 9 February 2012 and confiscation proceedings are underway. The court could not reach a verdict on whether another Vantis executive, Robert Faichney, was also involved and he may face a retrial.

Source – Accountancy Live – 16 January 2012