Doug Barrowman’s tax evasion venture fined

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A higher court case fined part of Doug Barrowman’s Isle of Man business, Knox Group and AML Tax, for failing to provide legally required information from HM Revenue and Customs.

The Scottish businessman, who is married to lingerie tycoon Baroness Mone, faces a £3.3million tax bill after a court hearing.

AML – part of the Knox Group – was struck off the Companies House register in 2019 for failing to file its accounts.

He was a promoter of a loan-based tax avoidance scheme, who recruited thousands of entrepreneurs, including doctors, social workers, nurses and computer scientists; who then received large bills from HMRC.

The court found the company had “aggressively promoted tax avoidance schemes” in the UK for years and fined it an initial £150,000 for failing to provide information to HMRC.

AML Tax, run by Arthur Lancaster, has been fined after HMRC brought an action in the High Court over the company’s failure to comply with official information notices in connection with a tax investigation.

The company must now submit the documents required to enable HMRC to calculate the tax due, which is currently estimated to be over £3million. The fine comes on top of penalties already imposed by HMRC, totaling around £9,000.

HMRC will now examine AML’s financial records to assess its corporation tax bill for 2014 and 2015.

The decision of the higher court case, noted regarding AML’s business: “The £60,000 profit claimed by AML actually tells us little about AML’s business activities. The opaque recharge mechanism, backed by no reliable details or documentation as to AML’s activity, means we cannot treat it as a relevant figure.

“On all the evidence which we have summarized above, and on the findings of fact which we have made, we have formed the opinion that AML contributed, in some measure, to the design and implementation systems sold by the group other than simply the pension planning scheme.

“On this basis, if AML had been rewarded on an arm’s length basis, then it would potentially have been taxable on an appropriate proportion of the £20m declared taxable in the Isle of Man.”

He argued that due to the lack of information provided by AML, the court was unable to form an opinion based on a “sound foundation”, noting that by awarding the company a ” significant discount for the uncertainty ’caused by the void of information’, we take the estimate that the tax at risk is not less than £100,000′.

At the other end of the spectrum, the tax at risk would be less than £4 million, or 20% of the group’s total profits, as this would assume that AML carries on all the profit-making activities of the group, entirely from the UK. . “It could potentially be in the six figures though.”

The case criticized the company for its conduct and highlighted the role of director Lancaster, who is a chartered accountant and certified tax adviser, describing him as “evasive” and displaying “a lack of candor”.

In the ruling, the court said: “Overall, we were left with the impression that Mr Lancaster was evasive, providing as little evidence as possible and unwilling to do more than he felt necessary.

“As a result, it appears to us that the evidence given by Mr. Lancaster in his witness statements and orally was confusing, lacking in candor, in some respects incorrect and littered with inconsistencies.”

Mary Aiston, HMRC’s Director of Meter Avoidance, said: ‘AML Tax used a range of tactics to try to thwart HMRC’s efforts to determine what tax was legally due, in a sustained campaign of noncompliance.

“I am delighted that their obstructive behavior has been sanctioned. HMRC is determined to drive the promoters of tax avoidance out of bankruptcy.

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