The director and finance director of a company set up to market a fraudulent tax avoidance scheme which attempted to raise more than £60m through claiming to invest in HIV research and conservation, have been jailed for a total of 14 and a half years, HMRC has revealed
Antony Blakey, director of Ethical Trading and Marketing Ltd, and finance director, John Banyard, enticed wealthy people to invest in the scheme with the promise of avoiding tax by supporting tree planting in the Amazon and research into a HIV cure.
The pair were aided by world renowned conservation scientist Professor Ian Swingland, who joined the fraud to help create the fake documents and add credibility to the scheme.
An HMRC investigation found the men created false documents to fraudulently claim expenses. They submitted fake scientific reports to HMRC and photos to support their claims but there was no evidence any of this had actually taken place.
HMRC found very little evidence of the £160m the pair claimed to have invested in Brazil between March 2005 and March 2009 and no evidence on real funding for HIV research. the tax authority said the men sold this scheme as a marketed investment opportunity when in fact it was fraud masquerading as avoidance.
Investors were able to claim tax rebates on the losses that the businesses apparently generated, or lower their tax bills, by offsetting losses against £160m of income, attempting to avoid £60m in tax. The majority of repayments claimed were withheld by HMRC.
During the investigation, HMRC worked with a number of foreign jurisdictions including Germany, Mauritius, Brazil, the Netherlands, France, Cyprus and the US and found the fraudsters used offshore companies in Mauritius and the Seychelles to cover their tracks.
The men were found guilty in March 2017 after a trial at Southwark Crown Court that began in September 2016. Blakey was jailed for seven and a half years, later revised to nine years at the Court of Appeal, Banyard was jailed for four and a half years, revised to five and a half years at the Court of Appeal.
Professor Ian Swingland received a two year sentence, suspended for 18 months. He had been awarded an OBE in 2007 for services to conservation, which was cancelled following his conviction.
HMRC is pursuing confiscation against the fraudsters to recover criminal proceeds and also pursuing those who invested in this now failed avoidance scheme to recover taxes due. However, there is no suggestion that the investors knew the scheme was a sham, or knew that their money was not being spent on research and development and carbon trading business activity.
Separately in November 2017, Blakey pleaded guilty to evading income tax of £441,000 through the use of offshore companies and bank accounts. In February this year Banyard pleaded guilty to income tax evasion of £207,000.
Martin King, a financial planner who hid his true income by arranging payment of work he did with Blakey through an offshore company, has also pleaded guilty the fraudulent evasion of £235,000 income tax.
All three men had used companies registered in the Seychelles and bank accounts in Cyprus to hide their personal income and evade tax. Banyard also pleaded guilty to facilitating the income tax fraud by Blakey and King.
Simon York, director of fraud investigation service, HMRC, said: ‘This was a calculated and cynical crime carried out by men who had no shame in using a worthy cause like HIV research to mask their criminality. In doing so, they attempted to steal millions of pounds from the taxpaying public - money that ultimately pays for vital public services like the NHS.
‘Promoting tax avoidance schemes is bad enough and we’re making it a priority to go after those who market them, but for these men that was just a first step in establishing an elaborate criminal operation that included offshore accounts, fake transactions and blatant lies.’
Report by Pat Sweet