Quillan & Ors, R. v

A prosecution appeal against a terminating ruling may comply with the requirement for immediate notice where a complex written ruling requires reasonable time to be read and for the prosecutor to consult an interested alleged victim. The prosecution must not temporise.

For tax relief at source under Finance Act 2004, a member is active where the pension scheme contains arrangements for the accrual of benefits. Contributions funded by loans remain payments into the scheme. A sham allegation requires a common intention of all parties to create rights different from those apparently created.

A conspiracy to defraud by prejudicing economic interests requires an identifiable victim with such an interest. HMRC has no continuing economic interest in tax relief lawfully paid into a pension scheme.

The Crown appealed, under section 58 of the Criminal Justice Act 2003, against Birmingham Crown Court rulings that there was no case to answer on counts alleging conspiracy to cheat and conspiracy to defraud.

The prosecution alleged that two self-invested personal pension schemes recycled loaned capital to obtain tax relief at source from HMRC. It contended that the relief was unlawfully obtained because the arrangements were shams, or because the clients were not active members of pension schemes. Alternatively, it alleged that the subsequent diversion of lawfully paid relief defrauded HMRC and the clients.

A preliminary issue was whether the prosecution had given immediate notice of its intention to appeal after a lengthy written ruling.

1. Appeal dismissed. The court had jurisdiction to hear the appeal. In a complex case involving a lengthy written ruling, the requirement in section 58(4) of the Criminal Justice Act 2003 to act immediately allows a reasonable period for the ruling to be read and for the prosecutor to consult an interested alleged victim or investigating body. The Crown gave notice within that period and did not temporise.
2. The judge was correct to stop counts 2 and 8. The clients made real monetary payments into registered pension schemes, although the funds were borrowed. A person is an active member under section 151(2) of the Finance Act 2004 where the terms of the scheme provide arrangements for benefits to accrue in respect of that person. The scheme documents did so. The clients were therefore entitled to relief under section 188, and the scheme administrators could claim relief at source under section 192.
3. The prosecution’s assertion that the arrangements were shams could not sustain a conviction. A sham requires the common intention of all parties to create legal rights and obligations different from those apparently created. The prosecution had neither particularised the alleged sham nor alleged that the clients were knowing participants. It could not both require their knowing participation to establish a sham and advance them as victims of the alleged fraud.
4. The judge was also correct to stop counts 1 and 7. On the prosecution case, the relief had been lawfully paid before it was allegedly diverted. HMRC then retained no proprietary or economic interest in it. The provisions concerning property belonging to another and fraud by abuse of position did not define the economic interest required for common-law conspiracy to defraud.
5. The prosecution could not prove that the clients were victims. The jury could not exclude that they knowingly participated, accepted cashback as their reward, and had no economic interest in funds diverted from the schemes. The prosecution undertaking took effect and the defendants were entitled to be acquitted.

• Court of Appeal (Criminal Division) — dismissed the Crown’s appeal under section 58 of the Criminal Justice Act 2003 and upheld the no-case rulings.
• Birmingham Crown Court — on 5 December 2014, upheld submissions of no case to answer on all counts against the defendants then tried.