HMRC has nailed two tax-dodging brothers in the same way it netted a conviction against Billionaire Bernie Ecclestone.
Michael Hirst, 54, from Wakefield, and Stephen Hirst, 61, from Bridlington, both pleaded guilty to cheating the public revenue and were sentenced on Thursday at Leeds Crown Court.
They were sentenced for tax evasion of over £3.2 million, after they set up offshore companies to hide large profits from a land sale.
The pair had been given the chance to come clean about their tax affairs when HM Revenue and Customs (HMRC) began a civil tax investigation in 2013.
They were offered the chance to pay what was owed plus a penalty through a formal civil process known as a Contractual Disclosure Facility (CDF) or a 'COP9'. The COP9 process requires the taxpayer to make a “full, open and honest” disclosure or face a criminal investigation.
The men initially failed to respond and then provided only partial information, which resulted in a criminal investigation being launched in November 2016.
An HMRC spokesman said: “CoP9 is the process that was used in the recent conviction of Bernie Ecclestone.”
In October 2023 Mr Ecclestone was given a suspended prison sentence after he pleaded guilty to a fraud charge over his failure to declare millions of pounds held in a trust in Singapore to the tax man.
The 93-year-old billionaire agreed to a civil settlement of £652.6 million over funds that were owed over the course of 18 years.
He had also initially been offered the chance to settle the debts through the CoP9 process.
Both Hirsts have also been disqualified from acting as a company director for eight years. Additionally, they were both jailed for two years with the sentence suspended for two years and, as a condition of the sentence, the Judge ordered Stephen Hirst to pay a fine of £12,000 and Michael Hirst a fine of £8,000.
The prosecution showed that the evasion of tax was planned over many years. In August 1999, a company owned by the brothers called 'Heritage Holdings Limited' bought land on Park Drive in Wakefield for just over £700,000.
The brothers split the Park Drive land into four parts and sold some of the land, for a lot less than it was worth, to a second company 'TIMS Investments Ltd', which was registered in Gibraltar but run by the defendants from the UK. They also set up another company of the same name in the British Virgin Islands.
In March 2007, the land was sold for over £10 million after planning permission was granted. This should have generated a tax liability of over £3.2 million, however the brothers did not declare this to HMRC, and used their offshore businesses to hide the profits.
When HMRC started making enquiries, both men were given a chance to declare any tax liability. Instead, they complicated the investigation by failing to declare any association with their offshore companies in statements to HMRC.
Michael Hirst and Stephen Hirst pleaded guilty to cheating the public revenue on 18 July 2023 at Leeds Crown Court. At the defense request, sentencing was deferred by the court for a total of 12 months, to enable the brothers to voluntarily pay both the tax owed and the prosecution costs of bringing the case to court. The tax and prosecution costs have now been repaid.
Andrew Fox from the Crown Prosecution Service said: “The defendants dishonestly manipulated the system and made every attempt to evade their tax liabilities.
“The amount of unpaid tax was substantial, and involved millions of pounds that should rightly have been paid into the public purse. We are pleased to have secured justice and the repayment of the tax.”
“Our specialist prosecutors will continue to work closely with investigators such as HMRC to prosecute cases of tax fraud and bring perpetrators to justice.”
Zoe Gascoyne, Deputy Director, Fraud Investigation Service, HMRC, said: “Stephen and Michael Hirst had numerous opportunities to be honest about their tax affairs.
“Instead, they lied about the network of firms and ownership structures they had set up to commit fraud and have ended up with criminal convictions.
“We are pleased to have recovered every penny of the money they stole, which will now be used on the public services we all rely on.
“We continue to work tirelessly to ensure the tax system is fair to all and this case shows once again that we will work with international partners to ensure a level playing for all taxpayers.”