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Briton Gaoled For GBP76m Offshore Fraud

by Robin Pilgrim, LawAndTax-News.com, London

06 December 2005


UK citizen Ian Andrew Leaf was gaoled last week for 12 years for a fraud in which he used fictitious loans from a Nauru bank to reclaim GBP54m in tax from HM Revenue and Customs.

Leaf, who had gone to live in Switzerland in an attempt to escape UK justice, bought 13 UK subsidiary companies which were subject to UK tax. Once Leaf acquired the companies they were used solely for fraudulent purposes.

When purchased by Leaf, as well as outstanding tax liabilities from past profits, the companies held enough cash to pay the tax owed. However, rather than using the money to pay the liabilities, Leaf created fictitious documents from a bank registered in the Pacific island of Nauru, controlled by him, which showed the companies had borrowed huge sums of money. The resulting fabricated interest payments were offset against tax. It was also falsely claimed that these loans were used to undertake massively profitable foreign exchange deals, not subject to UK tax out of which were paid
dividends, which he then falsely used to reclaim, corporation tax rightly paid by the companies before he purchased them.

Leaf was found guilty of 13 counts of fraudulent trading, contrary to section 458 of the Companies Act 1985: one count for each of the 13 companies acquired using this particular scheme. The offence of fraudulent trading requires the prosecution to prove that the defendant was knowingly carrying on a business for fraudulent purposes.

In respect of the 13 companies included in the indictment, the loss of tax exceeded £54 million with a further £22 million plus reclaimed, but not repaid by the Inland Revenue to Leaf.

Dave Hartnett, HMRC Director General responsible for compliance strategy said: "This has been a long and complicated investigation but one which shows our determination to track down criminals who defraud the UK
taxpayer. Leaf believed that by leaving the UK he could escape justice but he was wrong. We will seek to bring to justice anyone who sets out to line their own pockets at the expense of honest taxpayers. This was a multi million pound crime and the sentence reflects the seriousness of his offences."

This case was successfully prosecuted by the Revenue and Customs Prosecutions Office (RCPO). RCPO, created only in 2005, is an independent prosecuting authority which reports to the Attorney General, and is responsible for the prosecution of all HMRC cases.


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