Photo: Habeed Hameed, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

Bernie Ecclestone, the former boss of Formula 1, has pleaded guilty to fraud following a worldwide investigation into his tax affairs by HMRC.

The billionaire businessman admitted fraud by failing to declare a trust that held assets worth more than £416 million.

The 92-year-old has been sentenced to 17 months in jail, suspended for two years. And he has made a payment of more than £650m in relation to his wider tax affairs, covering tax, interest and civil penalties. Part of this payment is a Failure to Correct (FTC) penalty for offshore non-compliance, charged at the maximum rate of 200%.

£400 million Singapore trust

HMRC began a civil tax investigation into Ecclestone’s tax affairs more than a decade ago, in 2012.

He was offered the chance to correct any mistakes in his tax and pay what was owed, plus a penalty, through the Contractual Disclosure Facility (CDF).

The CDF – also known as COP9 – requires the taxpayer to make a “full, open and honest” disclosure or face a criminal investigation.

The ex-F1 motor racing boss said he wasn’t the settlor or beneficiary of any offshore trust in follow up interviews with civil tax investigators in 2015.

But information given to HMRC by the authorities in Singapore showed Ecclestone had lied. With support from these authorities, HMRC went on to discover Ecclestone was the settlor and beneficiary of trusts, including one that held $646.45 million (£416 million) in 2010.

Fraud by false representation

Ecclestone admitted a single charge of fraud by false representation during a hearing at Southwark Crown Court on October 12, 2023.

Richard Las, CBE, Chief Investigation Officer and Director Fraud Investigation Service, HMRC, said: “Bernie Ecclestone has had ample time and numerous opportunities to take responsibility and be honest with HMRC about his tax affairs.

“Instead of taking these opportunities he lied to HMRC and as a result we opened a criminal investigation.

“This investigation has involved enquiries around the world and culminated with Bernie Ecclestone’s guilty plea to fraud. He now has a criminal record and has paid £652 million relating to his wider tax affairs.

“This conviction demonstrates no-one is above the law and HMRC will work tirelessly to ensure the tax system is fair to all and pays for our vital public services.”

Andrew Penhale, Chief Crown Prosecutor, said: “Bernie Ecclestone has pleaded guilty to a single offence of fraud relating to dishonest representations to HMRC. All members of UK society, regardless of how wealthy or famous they are, must pay their taxes and be transparent and open with HMRC about their financial affairs.

“We are pleased to bring such a complex case to a successful conclusion. We worked very closely with HMRC throughout and it is rewarding to see that they have also secured such a significant civil tax settlement, through the negotiation process.”

Anyone with information about suspected tax fraud can report it to HMRC online.

Our thoughts on the Bernie Ecclestone fraud case

While most taxpayers won’t have £416m sat in an offshore trust, this case illustrates the importance of understanding the potential consequences of not making full disclosure to HMRC when under investigation.

Mr Ecclestone didn’t make full disclosure, so his final tax liability – including interest and penalties – would have far exceeded what would have been paid if he’d been upfront during the COP9 process. Plus, he now has a criminal record.

It’s a warning to taxpayers to be honest with HMRC when under investigation and to make sure they bring all their tax affairs up to date.

UK resident taxpayers are taxed on worldwide income and gains, so keeping wealth in offshore structures doesn’t protect them from the UK taxman. So, it’s vital all assets are disclosed regardless of jurisdiction.

Plain-English tax advice

Our specialist tax consultants can advise you on a wide range of tax matters, including offshore tax and trusts.

We’re also experienced at handling HMRC tax enquiries and investigations on behalf of our clients. Plus, we offer a tax expert witness service for solicitors and forensic accountants.

Chat to our friendly team on 07813 434195 or email: stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation