Should Redknapp have gone to court?
From Tax & Technical Feb 9 2012 BY: Simon Danaher
, Online News Editor
, International Adviser
Should the Harry Redknapp/Milan Mandaric case have gone to a criminal court? Now that the dust has settled a little, the question of whether or not such an expensive trial, which ultimately failed to bring a conviction, should ever have been heard in the first place has been on many a lip.
It is perhaps not as straightforward as it may seem.
Let’s have a quick look at what we do know. The case took around five years to come to court, this includes hundreds of hours of HMRC, Police and Crown Prosecution Service time, which some media outlets have estimated could have cost as much as £8m. Whether this figure is accurate or not is perhaps irrelevant, we know it was expensive.
What the CPS has confirmed is that the cost for legal counsel in relation to the two trials, which it called “Operation Apprentice”, stood at £944,782.68 at the end of 2011. We can assume this figure has increased substantially since then.
Regardless, even £944,782 is around 13 times the amount of tax, estimated at £70,000, payable on the £189,000 in question.
We also know there was an account in Monaco set up by Redknapp which was named after his dog Rosie and that untaxed payments were made to it by Mandaric.
With these facts in mind, the question therefore was whether the payments made to the account should have been taxed or not. The jury has decided the latter, but does that mean the case should not have been heard?
George Bull, senior tax partner at Baker Tilly, suggests, rather cryptically, that “you cannot judge the answer by the result”.
“There seemed to me to be a set of fairly simple questions which HMRC did not manage to satisfy before bringing this case to court and as a result, lost,” said Bull.
“However, if the jury had found for the prosecution – would that have been a good use of money? HMRC would have argued, not only would it have got the tax, but, more importantly, with the risk of a custodial sentence to follow, the case would have acted as a significant deterrent to fraudsters.”
As it stands HMRC did lose and it does raise the question, given the evidence was clearly not strong enough, whether it was a good use of taxpayers’ money.
Frank Strachan, head of tax and tax dispute resolution at LSG Solicitors, thinks perhaps not.
“It looks on the surface as if HMRC took a telephone call with a News of the World journalist to be their smoking gun. Given the current environment this seems more than flimsy,” he said.
“As a taxpayer, I would question the commercial sense in spending £8m in order to get a prosecution in this case.”
However, Strachan added that the case does highlight the will inside HMRC to pursue such cases.
“It shows HMRC’s determination to tackle offshore tax evasion, but clearly with the result that they have had, they have not picked the right vehicle. For some people it may be enough for them to realise that, while a jury found Mr Redknapp and Mr Mandric innocent, they may not do the same with them.”
Do you think HMRC was right to pursue Redknapp in this case? Let us know your thoughts below.