Ferati, R v

In a prosecution for fraudulent evasion of tax, the disparity between actual and declared profits may be relevant to whether a proprietor knew that the declaration was inaccurate. It does not create a fixed percentage threshold or dispense with proof of knowing dishonest involvement. A judge may identify collusive dishonesty as a possible explanation where the evidence raises it, even if the prosecution does not allege collusion. Guilt follows if knowing dishonest involvement is proved, whether the defendant acted alone or with another. Where a defendant relies on records said to be accurate but withholds them after offering them, non-production may bear on credibility only. In those circumstances, it does not infringe the right against self-incrimination or reverse the burden of proof.

The appellant, a restaurant proprietor of previous good character, was tried at the Crown Court at Manchester on charges of fraudulent evasion of income tax and VAT. He maintained that his accountant was responsible for any inaccurate returns. The judge directed the jury on the relevance of the disparity between actual and declared profits, asked an expert about possible collusion between the appellant and the accountant, and permitted the jury to consider the appellant’s failure to provide further takings books when assessing his credibility. The appellant was acquitted on two counts after successful submissions of no case to answer but convicted on five others. He appealed on the grounds that the judge had misdirected the jury, raised an impermissible alternative case, and infringed the right against self-incrimination or reversed the burden of proof.

The appeal was dismissed. The convictions were safe, whether the grounds were considered individually or collectively.

1. Disparity between profits. The judge was entitled to seek information about the disparity between actual and declared profits. A greater disparity could make it more likely that a business proprietor knew the declared profit was inaccurate, while a small disparity might make the prosecution’s task more difficult. The distinction between turnover and profit remained relevant, but the judge’s preliminary comments did not impose a fixed percentage threshold or cause unfair prejudice.
2. Possible collusion. The defence case was that the accountant alone was responsible for the understatement. Its expert evidence nevertheless raised the possibility that both men had acted dishonestly. The judge’s question did not invite improper speculation. A direction excluding collusive dishonesty would have been wrong in law: if the jury were sure that the appellant acted dishonestly and was knowingly concerned in the fraudulent evasion of tax, he was guilty whether he acted alone or in collusion.
3. Non-production of daybooks. The appellant relied on the daybooks as accurate records supporting his account. He had offered to provide them, later declined to do so, and maintained in cross-examination that they were accurate. Their non-production was therefore relevant to the jury’s assessment of his credibility, and only to the extent the jury considered appropriate. The jury were also directed that he had no obligation to provide the books and had said he acted on legal advice.
4. The use of that evidence did not deprive the appellant of his right against self-incrimination or reverse the burden of proof. The comparison with circumstances covered by section 34 of the Criminal Justice and Public Order Act 1994 was inapt, because the evidence concerned the appellant’s own offer and withdrawal and its bearing on credibility.

• Court of Appeal (Criminal Division): considered an appeal by leave of the single judge against convictions for five offences of fraudulent evasion of tax and dismissed the appeal.
• Crown Court at Manchester, Minshull Street: the appellant was tried before a judge and jury; submissions of no case to answer succeeded on two counts, and the jury convicted him on five counts.