Ex-BHS owner Dominic Chappell jailed over £500,000 in unpaid taxes
Former BHS owner Dominic Chappell has been jailed for evading more than £500,000 in taxes on income from his £1 deal to buy the failed high street chain.
The 53-year-old’s offending was an “egregious example” of cheating the public revenue, Southwark Crown Court heard, with the businessman spending a fortune on a luxury lifestyle.
He was jailed for six years for evading VAT, corporation tax and income tax owed on his £2.2 million income from the BHS deal.
His lawyers claimed he became, and still is, “utterly broke” because BHS’s hugely underfunded “pension problem exploded” within two weeks of him controversially buying BHS from retail tycoon Sir Philip Green in 2015.
His defence suggested that, had BHS not failed, he would have had the funds to pay his tax liability, but a jury found Chappell guilty of dishonesty after deliberations over three days.
He had denied three charges of cheating the public revenue related to his bankrupt finance company Swiss Rock Limited.
But Mr Justice Bryan said Chappell’s actions “over a substantial period of time is an egregious example of such offending”.
The judge gave the total figure lost to HMRC in unpaid taxes as £583,739.20, and told Chappell his crimes were so serious that “only an immediate custodial sentence is appropriate”.
The businessman, of Blandford Forum, Dorset, had claimed to be “simply too busy” to sort out his business dealings properly and said he was “let down by others”.
But the judge rejected this, saying: “You were not overwhelmed by your other pressures, and you were not too busy or under too much pressure to spare the time to buy yourself trappings of luxury with monies that would have been better deployed to pay the taxes due.”
His luxury lifestyle had included a £90,000 yacht, a Bentley Continental car, a Bahamas holiday and some expensive Beretta guns.
Chappell, wearing a light-coloured shirt, blue suit jacket, jeans and blue, white and orange trainers stood in the dock as he was sentenced and had no reaction as he was led, carrying a holdall, from the dock by a prison officer.
BHS was losing £1 million a week and had a £250-500 million pension deficit when Chappell’s consortium bought it in 2015.
BHS limped on before collapsing and causing the loss of 11,000 jobs in April 2016.
Chappell was charged with providing false or misleading information and also failing to submit VAT returns.
It was alleged that Chappell did not arrange for the correct VAT amounts to be registered and he also did not pay VAT.
Chappell was also accused of failing to pay corporation tax as well as personal income tax from dividends he received from Swiss Rock.
With the benefit of hindsight, Chappell told the jury the BHS deal was “a life-changing catastrophe” and he should “never have touched it with a barge poll”.
During his evidence, Chappell repeatedly said he is “not an accountant” and was relying on the advice of his professional financial experts to deal with the situation as he was “firefighting” the pending collapse of BHS.
Looking back on the BHS deal, Chappell said: “It was a life-changing catastrophe. I would never have touched it with a barge pole.
“We were given forged and misleading documents by PricewaterhouseCoopers (PwC). I was lied to by Sir Philip Green, as were my board.
“This catastrophe has cost me my marriage, my money and my reputation.”
Chappell told the court he was “lied to” by PwC, who were BHS’s auditors.
He said its information about the state of the firm “was not a true reflection” of what was going on.
The Pensions Regulator (TPR) also launched an investigation into the BHS retirement fund.
Chappell said he did not dodge paying his taxes and whatever was due would be paid as soon as he could reconcile the accounts, which he feared had been drawn up incorrectly.
He blamed “flawed” advice from one of his accountants.
Chappell claimed that BHS was forced into liquidation because of the actions of Sir Philip in reneging on promises of financial support for the pension fund and going back on a promise to provide working capital to BHS after the sale.
In contrast, prosecutor Mark Bryant-Heron QC stated that Chappell’s actions showed that “tax was the last thing he was going to pay” and he “used the money to fund his lifestyle”.
In November 2019 Chappell was banned from running a company for 10 years, with the Government’s Insolvency Service saying he had carried out “reckless financial transactions” and “failed to maintain adequate company records”.
And in January this year he was ordered by TPR to pay £9.5 million into BHS’s pension schemes.