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Hillgrove trial: ‘I was set up,’ says PR

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20th Mar 2014
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Presenting his defence case at Bristol Crown Court, Richard Hillgrove claimed that HMRC’s investigator colluded with his former accountants Bishop Jones to concoct a high-profile criminal case against him.

“I believe I was set up,” the celebrity PR agent said from the witness stand as he presented his version of events.

The incorporation of Hillgrove Public Relations Limited

A key turning point in the case occurred when Bishop Jones created a new limited liability company, Hillgrove Public Relations, that Hillgrove said he did not authorise. At the time he was told that all the assets and liabilities - including the tax debts - of RJH Management LLP would be transferred to the limited company. But this turned out not to be the case.

“Ms Dale said she would look to incorporate and transfer all assets and liabilities from the LLP to this limited company,” Hillgrove said. “The reason Bishop Jones told me this might happen was because this would reduce the tax liability. That was their recommendation.”

Yet the suspicious activity report (SAR) submitted by Michelle Bishop to SOCA in January 2011 suggested that “in view of the excessive tax liability of RJH Management LLP”, Hillgrove used the transfer “to disguise the true level of the tax liability”.

Hillgrove said the SAR was at odds with Bishop’s previous advice to him on the transfer of assets. “I would strongly suggest this came from Mr Harding and not Ms Bishop,” he said.

The finances and bank accounts of the two companies became very confused by the incorporation that he said was the result of “nothing untoward by me”.

In his explanation, the incorporation occurred after he approached NatWest bank about setting up a savings account into which he planned to pay weekly amounts of the VAT due so that he could settle his VAT bills at the end of each quarter.

The NatWest person he dealt with, Phil Hall, might have been called a “bank manager “, but he was really a salesman more interested in getting him to take out a current account and associated financial products, Hillgrove said. His accountants frequently made referrals to the bank.

“He said, ‘Don’t worry... I know Bishop Jones... I’ll sort it out with your accountant,” Hillgrove said.

“That’s it. I found out two to three weeks later that they’ve incorporated a company. I asked why, ‘I didn’t ask you to do it’. There’s no paper trail.

“They said that if I didn’t have a separate entity from the LLP, I couldn’t open that account.”

As a result of the new arrangement, he said Louise Dale told him he needed to get a new copy of Sage and a new PC, because you could not run two copies of the software on the same machine.

Apologising to him, Dale said: “I’m sorry. I didn’t check you could move the tax debt from the LLP.” He was also lumbered with unwanted financial products when he was struggling to meet payments to HMRC under an onerous time to pay (TTP) arrangement.

“Why is Louise Dale, Mr Harding’s main witness, selling me all these products with Mr Hall?” he asked the jury.

Time to pay business plan challenged

Hillgrove took issue with the business plan prepared by Louise Dale at Bishop Jones to support the TTP arrangement, which he said was one of the prosecution’s key pieces of evidence against him. The base line projections for 2011 were based on 2010’s figures, but the model also included growth forecasts showing 100% growth.

When preparing the spreadsheet, Dale had asked him to suggest some potential new clients. “I thought her list was a lead list or wish list,” he said. “It can take 15 months to pitch a  client. The idea that this can be presented to HMRC defies logic.”

The result of the overoptimistic figures was that he was given a TTP arrangement that escalated every three months from £5,000 in the first three months, to £7,500 in May-July and then £10,000 in August and September 2011. He would only be able to save his firm if he hit a repayment target of £50,800 by the beginning of September.

It was totally impossible to go up from 10 to 30 clients, Hillgrove said.

“Something happened,” he claimed between Louise Dale preparing these figures and presenting them at a meeting with his management accounting adviser Geoff O’Sullivan and HMRC’s Fiona Subrue.

HMRC’s Subrue “must have thought that she was being extremely generous” and been confident of getting the agreed amounts because of the doubling of revenue, Hillgrove argued.

“I wasn’t party to these figures. I wasn’t given it. As far as I’m concerned, the only person who got this was Louise Dale…

“It’s wholly unrealistic. It’s not Ms Subrue’s fault. It’s down to a breakdown of communication between me and three advisers and their cast iron professional guarantee that I would double turnover in the middle of a recession,” he said.

The Sage bookkeeping entry

In his defence, Hillgrove challenged a bookkeeping reference on 1 May 2011 that HMRC’s Paul Harding said he saw transferring all the tax arrears in RJH Management LLP to the limited company. “I said you couldn’t do that because it wouldn’t be legal. Ms Subrue wouldn’t allow that.”

As the deadline for the time to pay agreement neared, Hillgrove said his accountants started to raise the idea of phoenixing the limited company and referred him to one of their associates. At Ms Bishop’s prompting he suggested a name for a new company she incorporated, Land of the Long White Cloud, but he grew increasingly concerned about the advice he was being given.

He took his concerns to James Caan, who strongly advised him against that route and put him in touch with a new accountant, Mr Shah.

His new accountant’s evidence would show the jury that he did plan to settle his tax liabilities by closing down Hillgrove Public Relations Ltd and moving everything back to his LLP, which could be done by issuing credit notes.

He questioned why the case was so serious was being tried in a criminal court, when someone who was late filing their VAT might go to a civil court. He told the jury about guidance on HMRC’s website about the late filing penalty regime, which builds up over six defaults before the taxpayer is faced with a 15% surcharge and another “late registration” penalty, he said.

“There is no mention of dawn raids… this is all in the imagination of Mr Harding.

“The bookkeeping entry constitutes a serious crime. I didn’t do that. I cocked up. Mr Harding saw the fake bookkeeping entry and he seized upon it…

“There was no deliberate dishonesty by me, because it didn’t move. It couldn’t. I am absolutely convinced he wrote the SAR personally.

“Don’t think they don’t do this. They’re convinced they’re secret police.”

Later in his speech, Hillgrove returned to this theme and suggested that the HMRC investigator had overlooked the payments he had made - or caused them to disappear from the tax department’s computer systems.

“I’m suspicious about Mr Harding because Ms Bishop’s bookkeeping entry looked like I’d moved the liability from one company to the other. Why didn’t that show up on his 5x5x5 report?

“PAYE is the same thing. I knew I should pay but at the time you could tell HMRC what the real figure was at the end of the year. They knew there were 12 staff. We didn’t need to hide anything. They wouldn’t know it would be £43,000 until March of the next year.”

His accountants had made mistakes, he argued, and HMRC’s inspector too. But likening them to a bush fire, he said their little lies had escalated to a point of no return.

“This is all very, very, very confusing, but not to disguise crime. It was all a ludicrous situation that just got out of hand.”

The case continues. To preserve the fairness of this report comments have been disabled.