Roy Faichney, a former adviser at Vantis Tax, has been jailed for four years and disqualified from acting as a director for 10 years for his part in a £70m tax fraud.
As managing director of Vantis, Faichney had a “gentleman’s agreement” with his deputy, David Perrin – who was found guilty for his part in the charity scam in January – to share the £4.5m profit from a fraudulent tax scheme sold to wealthy customers.
The pair acted together to extract the cash they made through a Jersey bank, where Faichney withdrew his share to spend on luxury properties and paintings, while also using the scheme to evade tax on his £200,000 company salary.
They used a network of finance professionals to advise more than 600 clients to buy shares, worth a few pence each, in four new companies they had set up.
Faichney 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 329 million 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, when in fact they were still worth the pennies they were originally bought for.
As previously reported on AccountingWEB the court heard that the scheme proved so popular that Vantis employees sang a song at their annual conference to the tune of “I will survive”, which 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.”
His Honour Judge Blacksell QC, at Blackfriars Crown Court, said: “If you ever had a moral compass you lost it or buried it under the property purchases, furnishings, holidays and cruises.
“The general public are sick and tired of men such as you and schemes such as this. This is high net worth fiddling. The general public should applaud the dedication and commitment shown by HMRC in pursuing all aspects of this case. They have been well served.”
Jenny Crutchfield, of HMRC Criminal Investigations, added: “Faichney thought he could attack and defraud the tax system by using his knowledge as a tax adviser. Together with Perrin, not only did he attempt to cheat taxpayers out of millions of pounds, but callously abused a tax relief designed to benefit charities by arranging the gifting of 329 million virtually worthless shares.”
A timetable for confiscation proceedings has been put in place to recover the benefit Faichney obtained from his criminal activities.
After Faichney’s sentencing it was also revealed that Perrin’s 18 months sentence for his part in the fraud was referred to the Court of Appeal for review, which found his sentence had been unduly lenient and should have been seven years. However, due to Perrin’s health, the court did not alter the 18 month sentence he received.
The conclusion of the trial also comes as an uncomfortable reminder for RSM Tenon, who back in June 2010 acquired the advisory arms of Vantis after the group entered administration.
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