The charges related to untaxed payments totalling £189,000 (€226,000, $300,000) made by Mandaric to a Monaco bank account belonging to Redknapp when the two were working for Portsmouth FC – Manadric as chairman and Redknapp as club manager.
HM Revenue & Customs alleged that the payments made were for Redknapp’s employment services and as a bonus for the sale of striker Peter Crouch and therefore should have been subject to income tax. Redknapp and Mandaric always maintained the payments were gifts and so should be exempt from tax.
Jurors took just five hours to decide in favour of the pair at Southwark Crown court where the high profile case has been held.
Although there seemed to be general public surprise at the news that HMRC had lost a case against an alleged tax evader, some of those more familiar with the business of tax disputes said it was never going to be a cakewalk for the Revenue, given the need, under UK law, for the prosecution to prove its case “beyond a reasonable doubt” in a situation in which it is one side’s word against another.
Among those who were not surprised was Frank Strachan, Head of Tax and Tax Dispute Resolution at LSG Solicitors in London, who cited the difficulties HMRC had in proving “beyond reasonable doubt that the payments made [to Redknapp] had been made in relation to duties performed.”
“That was always going to be a challenge,” he added.
“According to the jury, the prosecution failed to do that, and therefore they were duty bound to find the defendants not guilty,” he said.
“On reflection, I am sure HMRC would have preferred to have taken a more watertight case through to prosecution, particularly a case with such high profile defendants.
Chris Martin, assistant director, criminal investigations, at HMRC said: “I would like to thank my colleagues in City of London Police, Crown Prosecution Service and HM Revenue & Customs who worked so hard and with great professionalism to get this complex case before a jury.
“Tax evasion is not a victimless crime because every penny of tax evaded reduces the UK’s ability to pay down the deficit and support our public services. That is why we relentlessly pursue those we believe are evading tax.
“We have no regrets about pursuing this case because it was vitally important that the facts were put before a jury for their consideration. We accept the verdict of the jury but I would like to remind those who are evading tax by using offshore tax havens that it always makes sense to come forward and talk to us before we come to talk to you.”
Yesterday IA published an article written by Prudential’s Gerry Brown which explained some of what the jurors needed to consider in this case and highlighting other similar cases from the past – including when Bobby Moore was chased by HMRC following the 1966 World Cup.
For a round up of some of the highlights of the trial click here.
