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Bernie Ecclestone’s Historic £652m Tax Settlement and Legal Battle with Trusted Adviser

Published by Chirag
Published Date: October 13, 2023

Former Formula One boss Bernie Ecclestone has pleaded guilty to a tax fraud charge and agreed to pay a record-breaking £652mn civil settlement.

At a hearing at Southwark Crown Court in London, the 92-year-old billionaire businessman admitted to a single charge of fraud. This charge pertained to Ecclestone's failure to declare £400mn of overseas assets to HM Revenue & Customs (HMRC).

The £652mn civil settlement includes a tax penalty of £330mn and covers 18 tax years, ranging from 1994-95 to 2021-22. It's worth noting that this settlement is the largest ever paid by an individual in a UK fraud case.

Ecclestone's Tax Fraud and Record Civil Settlement

Ecclestone had faced allegations of dishonestly making a false representation to UK tax authorities in July 2015. He claimed to have established only one trust for his daughters and denied being the beneficiary of any other trust within or outside the UK.

The settlement includes a hefty £330mn tax penalty, which is considered a historic amount by tax experts. Ecclestone had been offered the opportunity to correct his tax mistakes through HMRC's contractual disclosure facility but chose not to do so.

Bernie Ecclestone

Ecclestone's sentence was suspended. Despite the serious nature of his offense, the judge cited mitigating factors such as his age, frail health, lack of previous convictions, and the significant civil settlement. This led to the decision to impose a suspended sentence instead of a fine or community order.

Ecclestone expressed deep regret for the events that led to the criminal trial. He did not make any further comments on the matter.

Mullens: Ecclestone's Trusted Legal Adviser and £20 Million Tax Battle

In a separate tax case, former adviser to Bernie Ecclestone, Stephen Mullens, has been ordered to pay more than £20m following a personal tax battle.

Mullens received approximately £40m in seven disputed payments between 1999 and 2013 from the Ecclestone family trust and Ecclestone's then-wife, Slavica. He argued that these payments were not taxable income but gifts.

The First-Tier Tax Tribunal ruled that six of the seven disputed sums should be taxed as income, resulting in a tax liability of around £17.2m, along with approximately £4m in penalties for non-disclosure and interest. When considering penalties and interest, the total amount owed to HMRC exceeded £30m.

Bernie Ecclestone

HMRC successfully argued that six of the disputed payments were in exchange for services provided to the Ecclestone family. They challenged the characterisation of these payments as gifts.

Neither Ecclestone nor Slavica provided evidence during the dispute, and the judges found their absence from the case striking. They expressed doubts about their unavailability to give evidence.

Conclusion

Gifts of money are generally not taxable as income, but large "gifts" can be challenged by HMRC when there is an existing employer/employee relationship. Mullens will have to pay the significant sum following the tribunal's ruling.

These two cases involving Ecclestone and Mullens highlight HMRC's efforts to address tax issues and ensure compliance with tax laws in the UK.

Chirag
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