TaxMar 19 2020

Bankrupt liable for £16m tax advice hid assets

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Bankrupt liable for £16m tax advice hid assets

A former barrister who advised wealthy clients on illegal tax avoidance schemes and whose negligent advice left him liable for at least £16m in damages attempted to hide his assets from the authorities, the Insolvency Service has claimed.

On March 10 a High Court in London heard how Paul Baxendale-Walker, aged 56, had previously advised wealthy individuals on tax avoidance schemes, which were later found not to be legal.

Mr Baxendale-Walker had also been struck off as a barrister and solicitor. 

As a result of his dealings he was declared bankrupt in the High Court in July 2018 on the petition of a creditor, following a court ruling earlier in the year, which found he had given negligent tax advice which left him liable for damages of about £16m. 

But in last week's hearing another court heard how the former barrister had attempted to hide his assets during his bankruptcy proceedings and failed to make a "full and frank disclosure of his affairs" to the authorities or joint trustees.

According to the Insolvency Service Mr Baxendale-Walker failed to disclose his ownership of a home – purchased for close to £300,000 shortly before his bankruptcy – or the fact he had attempted to gift this ownership to an associate.

The government body warned this move would have been to the detriment of his creditors, to whom he owed money.

The Insolvency Service also said the former barrister failed to disclose an interest in the lease of a property in Knightsbridge, which was rented for more than £177,000, and understated his annual income. 

The court also heard how he assisted in the "concealment, removal or destruction" of electronic devices believed to contain records relating to his financial affairs.

As a result ICC Judge Mullen imposed an additional 10-year bankruptcy restrictions order against Mr Baxendale-Walker at last week's court hearing.

The order requires him to disclose his bankruptcy status if he attempts to secure £500 or more in credit and blocks him from acting as a company director without the permission of a court.

The official receiver, Anthony Hannon, said: "Paul Baxendale-Walker knew exactly what he was doing when he failed to disclose all his assets to the Official Receiver and the courts have rightly recognised the severity of his actions by restricting his activities for a decade."

An official receiver is a civil servant with the Insolvency Service who manages the first stage of bankruptcies and companies wound up by a court.

Mr Hannon added: "The case aptly demonstrates that a bankrupt has an absolute duty to co-operate with the official receiver and the trustee in bankruptcy.

"People in bankruptcy must co-operate to provide a full, frank and honest explanation of their assets, income and records in their estate and must make all reasonable endeavours to ensure that assets are realised for the benefit of the creditors."

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