Bernie Ecclestone, former Formula 1 racing boss, has pleaded guilty to fraud following an investigation into his tax affairs. HMRC reports that Mr Ecclestone admitted fraud by failing to declare a trust which held assets worth more than £416m.
In criminal fraud proceedings, Ecclestone was sentenced to 17 months’ imprisonment, suspended for two years. In settlement of his tax affairs, a payment of £652m has been agreed with HMRC.
HMRC points out that Ecclestone was given the chance to correct any tax errors via the contractual disclosure facility under Code of Practice 9, which uses HMRC’s civil powers and avoids criminal proceedings. The key point here was the failure to disclose Singapore trusts of which Mr Ecclestone was settlor and beneficiary. Information shared by the Singapore authorities with HMRC revealed this not to be the case.
The transcript of sentencing in the criminal proceedings (before Southwark Crown Court) sets out the relevant series of events, including details of the settlement reached with HMRC – noting that over half of the £652m agreed payment represented failure to correct penalties.
Reacting to the case, Andrew Sackey, partner at Pinsent Masons and former head of offshore, corporate and wealthy compliance at HMRC said: ‘HMRC will view Bernie Ecclestone’s plea as a very significant victory. It has invested heavily into the offshore, corporate and wealthy team over the last decade and highly public successes like this are a major return on that investment. This shows that HMRC is more than willing to take on the most complex cases involving high net worths.
‘HMRC is likely to continue to invest in the areas where it is seeing the biggest returns. If investigations into ultra-high net worths keep delivering on this scale, then this area will get more resource and more budget. That means more and bigger investigations of wealthy individuals in the coming years.’
Fiona Fernie, tax disputes and resolutions partner at Blick Rothenberg, commented: ‘If Mr Ecclestone had admitted to the position in 2015, he might only have faced a tax penalty of 15% of the tax due (depending on HMRC’s assessment of his behaviour up to that point) and would probably have avoided a criminal record.
‘However, by trying to hide the position in the way which he has, Mr Ecclestone became liable for a penalty for foreign tax evasion, which is likely to be as high as 200% of the tax which was illegally avoided, together with a criminal record. The poor behaviour of Mr Ecclestone in this case helps explain why the overall liability he now faces (ca. £652m of tax, penalties and late payment interest) is so high.’
Bernie Ecclestone, former Formula 1 racing boss, has pleaded guilty to fraud following an investigation into his tax affairs. HMRC reports that Mr Ecclestone admitted fraud by failing to declare a trust which held assets worth more than £416m.
In criminal fraud proceedings, Ecclestone was sentenced to 17 months’ imprisonment, suspended for two years. In settlement of his tax affairs, a payment of £652m has been agreed with HMRC.
HMRC points out that Ecclestone was given the chance to correct any tax errors via the contractual disclosure facility under Code of Practice 9, which uses HMRC’s civil powers and avoids criminal proceedings. The key point here was the failure to disclose Singapore trusts of which Mr Ecclestone was settlor and beneficiary. Information shared by the Singapore authorities with HMRC revealed this not to be the case.
The transcript of sentencing in the criminal proceedings (before Southwark Crown Court) sets out the relevant series of events, including details of the settlement reached with HMRC – noting that over half of the £652m agreed payment represented failure to correct penalties.
Reacting to the case, Andrew Sackey, partner at Pinsent Masons and former head of offshore, corporate and wealthy compliance at HMRC said: ‘HMRC will view Bernie Ecclestone’s plea as a very significant victory. It has invested heavily into the offshore, corporate and wealthy team over the last decade and highly public successes like this are a major return on that investment. This shows that HMRC is more than willing to take on the most complex cases involving high net worths.
‘HMRC is likely to continue to invest in the areas where it is seeing the biggest returns. If investigations into ultra-high net worths keep delivering on this scale, then this area will get more resource and more budget. That means more and bigger investigations of wealthy individuals in the coming years.’
Fiona Fernie, tax disputes and resolutions partner at Blick Rothenberg, commented: ‘If Mr Ecclestone had admitted to the position in 2015, he might only have faced a tax penalty of 15% of the tax due (depending on HMRC’s assessment of his behaviour up to that point) and would probably have avoided a criminal record.
‘However, by trying to hide the position in the way which he has, Mr Ecclestone became liable for a penalty for foreign tax evasion, which is likely to be as high as 200% of the tax which was illegally avoided, together with a criminal record. The poor behaviour of Mr Ecclestone in this case helps explain why the overall liability he now faces (ca. £652m of tax, penalties and late payment interest) is so high.’
