Barrister found guilty of dodging £600k of tax
Filed under: Tax
So what happened, and how was he caught?
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The casePershad first hit difficulties before 2000, after failing to submit tax returns and failing to tell HMRC about a change of address. As a result he was deregistered for VAT by the taxman in February of that year. This meant he couldn't charge VAT and he couldn't make more than the VAT threshold - which ranged from £54,000 in 2001 to £67,000 in 2008.
Pershad chose to ignore this, however, and according to his own tax returns, his income increased from £85,000 in 2001 to £346,000 in 2008. During this period he continued to charge his clients VAT, but instead of paying it to the taxman, he ploughed it into two luxury properties in Surrey and Somerset, and sending his four children to private school.
In all, he failed to pay VAT between June 1999 to September 2011. The total outstanding at that point was £627,839.
Found outThe taxman launched a taskforce investigating the legal profession in London in September last year. It is one of 30 taskforces, which begin with the individuals who are considered high risk. Pershad's failure to submit returns in the past and the level of income in his self-assessment when he was supposed to stay below the VAT limits, marked him out as a high risk individual worthy of investigation.
Pershad specialised in financial disputes, professional negligence and insurance cases. Never-the-less he tried to tell the jurors that although he worked as a freelancer out of chambers in London and paid tax through self-assessment, he thought his legal chambers paid his VAT.
The prosecutors argued that he clearly understood his financial position. Donald Toon, Director, Criminal Investigation at HMRC, said: "Pershad's 12 year history of tax evasion was blatant theft from the public purse. He thought he was above the law, but someone in his profession should have known better than to try to cheat the system, as HMRC will not stand by while criminals try to cheat the taxpayer."
"Declaring and paying VAT that is due is a legal requirement - not a lifestyle choice - so we are pleased that justice has been served. We would like to thank the chambers involved for their assistance in this case."
The penalty Pershad will pay will be decided at a hearing on 26 February. At the very least he will pay a large financial penalty and all the outstanding tax. He may also face up to seven years in jail.