Two accountants have been cleared of cheating the public revenue through a £1m charity relief tax scheme.
Montpelier Tax Consultants chief executive Watkin Gittins and former director at the firm Martin Calcutt were charged in connection with the scheme in August 2013.
The trial at Liverpool Crown Court came to an end last week after the prosecution decided to offer no further evidence against the pair and asked the judge to direct the jury to acquit them. A formal verdict of not guilty was then entered by the jury.
Keystone Law solicitor Mark Spragg, who represented Gittins, says HM Revenue & Customs has made a “humiliating climb down” to end the “long running and futile investigation”.
He says the investigation began in 2007 and relates to a plan involving a taxpayer making a gift of gilts to a charity with an option to a trust to buy those gilts for a nominal sum.
Spragg says: “This achieved a legitimate tax saving for the taxpayer and produced a welcome fee for the charity.
“The plan was closed down by HMRC in July 2004, but before then a number of taxpayers sought to take advantage of it. HMRC tried to argue that in relation to two only, out of a large number of taxpayers using the plan, Gittins knew that the claim to tax relief was fraudulent, even though he had no part in the drafting or submission of the individual’s tax returns.
“The jury’s verdict came after the evidence demonstrated that the taxpayers’ returns were, in fact, accurate. HMRC’s initial argument – that Gittins knew the gift to be ineffective – had been disposed of at an earlier hearing where HMRC accepted that the gifts were lawful.”
Spragg says Gittins will now consider what options are open to him to obtain recourse.
He says the investigation caused Montpelier Tax Consultants to shut down, and damaged the reputation and business of Montpelier Chartered Accountants.
Spragg says: “Gittins is saddened that he was made to go through this pointless ordeal and suffered the loss of a thriving business.”
HMRC declined to comment.