Amidst the debate over the abolition of juries in serious fraud cases, there has not been any discussion about the impact of judge-only trials on revenue fraud cases. Are judges likely to convict or acquit more often than juries or perhaps convict defendants in cases where a jury would have acquitted, and vice versa? In the absence of research into a jury’s thinking and the factors they consider, it is necessary to fall back on practitioner’s experiences and intuition in seeking to answer these questions.
Invariably, the central issue in a revenue fraud trial is the state of the defendant’s taxpayer’s mind, and whether the taxpayer fraudulently – deliberately and dishonestly – intended to deprive HMRC of tax monies to which it was entitled. Until now, this has been regarded as, par excellence, an issue for the jury – ‘twelve good men and true’ – and not a judge to decide.
The issue of a defendant’s taxpayer’s state of mind becomes particularly acute in a case where he contends he was participating in a tax avoidance arrangement which was lawful, but HMRC argue that the arrangement amounted to dishonest tax evasion, albeit camouflaged as tax avoidance. In these cases, the line between participating in lawful tax avoidance and engaging in dishonest tax evasion is difficult to draw. As Denis Healey, former Chancellor of the Exchequer, once quipped, ‘the difference between tax avoidance and tax evasion is the thickness of a prison wall’, and it is only the dishonest state of the taxpayer’s mind which converts a case from one of failed tax avoidance to criminal tax evasion.
When prosecuting these cases, HMRC has seen mixed results. Two celebrity cases in which HMRC failed to satisfy a jury of the taxpayer’s dishonest intent involved Ken Dodd and Harry Rednapp. Dodd was charged with tax evasion relating to undeclared cash found at his home, and Rednapp had faced charges of failing to declare payments related to Monaco bank accounts in high-profile trials. Whether a judge would have convicted the taxpayer in these two cases will never be known.
In contrast, in recent years there have been many cases where juries have convicted taxpayers of revenue fraud after the taxpayer unsuccessfully argued that their involvement was honest and amounted to no more than failed tax avoidance and not evasion. Again, whether a judge would have convicted or acquitted the taxpayers in these cases is a matter of conjecture.
But certainly, it would be a mistake to assume that a judge will not reject a case at a preparatory stage if evidence of a taxpayer’s dishonesty is not squarely presented before the court. In a leading criminal case decided over 25 years ago, a High Court judge made clear that a revenue fraud prosecution should not be permitted to proceed unless the prosecution could produce sufficient evidence of dishonesty on which a jury properly directed could convict.
Against this background, whether revenue fraud cases decided in a judge only trial will produce unexpected outcomes from those presently determined after trial by jury remains to be seen. The possibility of a higher conviction rate in some types of case, and a lower conviction rate in others, cannot be entirely discounted. The jury is still out on this one.
Amidst the debate over the abolition of juries in serious fraud cases, there has not been any discussion about the impact of judge-only trials on revenue fraud cases. Are judges likely to convict or acquit more often than juries or perhaps convict defendants in cases where a jury would have acquitted, and vice versa? In the absence of research into a jury’s thinking and the factors they consider, it is necessary to fall back on practitioner’s experiences and intuition in seeking to answer these questions.
Invariably, the central issue in a revenue fraud trial is the state of the defendant’s taxpayer’s mind, and whether the taxpayer fraudulently – deliberately and dishonestly – intended to deprive HMRC of tax monies to which it was entitled. Until now, this has been regarded as, par excellence, an issue for the jury – ‘twelve good men and true’ – and not a judge to decide.
The issue of a defendant’s taxpayer’s state of mind becomes particularly acute in a case where he contends he was participating in a tax avoidance arrangement which was lawful, but HMRC argue that the arrangement amounted to dishonest tax evasion, albeit camouflaged as tax avoidance. In these cases, the line between participating in lawful tax avoidance and engaging in dishonest tax evasion is difficult to draw. As Denis Healey, former Chancellor of the Exchequer, once quipped, ‘the difference between tax avoidance and tax evasion is the thickness of a prison wall’, and it is only the dishonest state of the taxpayer’s mind which converts a case from one of failed tax avoidance to criminal tax evasion.
When prosecuting these cases, HMRC has seen mixed results. Two celebrity cases in which HMRC failed to satisfy a jury of the taxpayer’s dishonest intent involved Ken Dodd and Harry Rednapp. Dodd was charged with tax evasion relating to undeclared cash found at his home, and Rednapp had faced charges of failing to declare payments related to Monaco bank accounts in high-profile trials. Whether a judge would have convicted the taxpayer in these two cases will never be known.
In contrast, in recent years there have been many cases where juries have convicted taxpayers of revenue fraud after the taxpayer unsuccessfully argued that their involvement was honest and amounted to no more than failed tax avoidance and not evasion. Again, whether a judge would have convicted or acquitted the taxpayers in these cases is a matter of conjecture.
But certainly, it would be a mistake to assume that a judge will not reject a case at a preparatory stage if evidence of a taxpayer’s dishonesty is not squarely presented before the court. In a leading criminal case decided over 25 years ago, a High Court judge made clear that a revenue fraud prosecution should not be permitted to proceed unless the prosecution could produce sufficient evidence of dishonesty on which a jury properly directed could convict.
Against this background, whether revenue fraud cases decided in a judge only trial will produce unexpected outcomes from those presently determined after trial by jury remains to be seen. The possibility of a higher conviction rate in some types of case, and a lower conviction rate in others, cannot be entirely discounted. The jury is still out on this one.
