Rohan Pershad QC, a barrister who used to practise from 39 Essex Street in London, was today convicted of cheating the public revenue.
Cheating the public revenue is a common law offence (as opposed to an offence defined by statute) which alleges the dishonest non-payment of VAT. It is crucial that the prosecution prove that a defendant has acted dishonestly in the non-payment of VAT in order to achieve a conviction.
It was alleged that Pershad failed to pay VAT on the sums he billed for his services as a barrister between 1 June 1999 and 24 September 2011, thereby cheating the public revenue. He claimed that he thought his chambers had indicated that his VAT liability had been taken care of.
HMRC considered Pershad to be a ‘missing trader’ after he left 2 Crown Office Row for 39 Essex Street. The Lawyer reported that he ‘dropped off the VAT radar’ and that following the verdict, HMRC revealed that Pershad was still filling out self-assessment forms, but used an invalid VAT number on invoices and pocketed the money himself rather than pay into the public purse. The forms showed that his income increased from £85,000 in 2001 to £346,000 in 2008.
Prosecutor Andrew Marshall QC of 18 Red Lion Court, said this had provided Pershad with a “private tax-free income of £600,000” and in that time he bought two homes – a property in Somerset for £490,000 and another in Virginia Water, Surrey, for £1,105,000.
The jury disbelieved Pershad and convicted him. Pershad received £624,579 which should have been paid to HMRC in VAT.
Sentencing powers of the court
As the offence is a common law offence, the maximum sentence is life imprisonment, however in reality, sentences fall far short of this.
There is no credit for a guilty plea and there is the highly relevant factor of the period over which the offence was committed.
When sentencing, the court can consider making the following orders:
- Compensation Order
- Confiscation Order
- Financial Reporting Order
- Deprivation Order
- Disqualification from acting as the director of a company
The Fraud guidelines do not apply to the offence of cheating the public revenue, however it may be open to the court to consider the principles of the Fraud guideline in relation to revenue fraud, however only as a point of reference. Higher starting points than the revenue fraud guideline are generally considered to be applicable.
Aggravating and Mitigating Factors
The CPS list the following as aggravating a mitigating factors:
- The amount involved
- The use to which money was put (spending on luxuries more venal than on necessities)
- Breach of position trust, such as by employee, director or trustee
- Elderly or vulnerable victim
- Extent of loss – intended and actual
- Extent of gain – intended and actual
- The period over which and the persistence with which the fraud was carried out
- Guilty Plea
- Voluntary repayments
- Personal factors such as illness, disability, family difficulties, etc
Offences of cheating the public revenue vary in their seriousness, from the amount of money involved, to the specific conduct. In this case, we have few facts to go on currently and so the following is a broad assessment of the possible likely sentence.
Mr Pershad cheated the revenue out of over £600,000, over a 12 year period. He lied about his conduct (by virtue of his conviction) and therefore did not plead guilty. The starting point in the revenue fraud guideline for £500,000+ a fraud not fraudulent from the outset and continuing over a significant period is 3 years. Presumably this is the category into which Pershad fits most neatly as prior to 1999, there are no allegations of impropriety in relation to his VAT bill.
Taking a little off because the starting point (although relating to obtaining money over £500,000) is actually based on a figure of £750,000, and adding a little on because cheating the public revenue is generally a more serious offence, Mr Pershad may be looking at a sentence in the region of 2-4 years.