A barrister from a well-known London chambers has been convicted of tax fraud after failing to pay £600,000 of VAT.
Rohan Pershad evaded the tax over a twelve year period, during which he bought two luxury homes and paid school fees out of a "private tax-free income of £600,000", prosecutor Andrew Marshall told Blackfriars Crown Court.
The prosecution is the first since HM Revenue and Customs set up a special taskforce targetting lawyers who evade tax.
Mr Pershad, 44 and formerly of 39 Essex Street Chambers, was deregistered for VAT by HMRC in February 2000 following a history of failure to submit tax returns and to tell the taxman about a change of address. Barristers are self-employed, meaning that they are responsible for their own tax affairs.
This meant he was unable to legally trade above the VAT threshold, which was between £54,000 in 2001 and £67,000 in 2008. However, his self assessment tax returns showed his income had increased from £85,000 in 2001 to £346,000 in 2008, breaching the VAT registration limit by £279,000. During this period he continued to use his invalid VAT number on invoices, meaning he was collecting the VAT on his fees but pocketing the money for himself rather than paying it to the taxman.
"Declaring and paying VAT that is due is a legal requirement - not a lifestyle choice - so we are pleased that justice has been served. We would like to thank the chambers involved for their assistance in this case," said Donald Toon, director of criminal investigation at HMRC.
Mr Pershad, who specialised in financial disputes, professional negligence and professional liability, said in court that he believed his chambers paid his VAT bills for him.
HMRC confirmed that it will now attempt to recover Mr Pershad's money. A spokesman said confiscation proceedings are underway. Mr Pershad will be sentenced later this month.
The tax office announced last September that it was launching a special taskforce to investigate solictors and barristers in London, and hoped to recover £3m from those who did not pay enough tax.
HMRC has launched more than 30 taskforces since May 2011, investigating everyone from scrap metal merchants to restaurant owners. The taskforces are concentrated in so-called "high risk" areas of work where the tax office believes that people are not paying the right amount of tax.
Michael Todd, from the Bar Council, said at the time of the launch that it was not clear why the legal profession was being targeted. "Barristers provide an essential, front-line public service which is crucial to the smooth running of our country's excellent and world-renowned justice system. The law is one of the UK's strongest exports, and barristers and solicitors bring billions in revenue to the UK every year," he said.