The jockey Frankie Dettori has been revealed as the previously anonymous taxpayer in a dispute with HMRC over his tax arrangements.
Dettori’s name can now be disclosed after HMRC won their appeal against Dettori’s bid for the case to be heard in private.
Meanwhile, the three-time champion jockey has released a statement, published on the Racing Post, saying he was “working closely” with the tax authority to resolve the matter. Dettori blamed his former tax advisers, who have since been dismissed, and said he was working to “unravel the mess”.
Here, I take a look at the dispute and explain what taxpayers and tax agents can learn from it.
Background to the Frankie Dettori tax case
The anonymity dispute was heard at the Upper Tribunal after HMRC appealed against a 2021 decision by the First-tier Tax Tribunal (FTT) for preliminary proceedings in Dettori’s tax matter to be heard in private.
The tax matter referred to the “substantive appeal” by the jockey (who was then referred to as the ‘Taxpayer’) against HMRC’s refusal of certain income tax deductions he’d claimed. The deductions were said to have arisen in relation to arrangements challenged by the tax body and which were the subject of two other lead cases.
The Upper Tribunal decision
The Upper Tribunal has now published its decision – including the identity of the previously unnamed taxpayer, Lanfranco Dettori.
Commenting on the earlier ruling by the FTT, the Upper Tribunal judges concluded Dettori had “obtained the benefit of privacy for all preliminary proceedings, without having produced any evidence of harm or prejudice, for an open-ended period”.
They also raised their concern about taxpayers benefiting from a blanket exemption from open justice “by the backdoor”.
The judges added: “This case illustrates the difficulties which can arise where an application by a taxpayer for privacy and/or anonymity is delayed. The practical effect of deferring the substantive application has been that the taxpayer has been able to avoid the open justice principle for all preliminary proceedings for over two years, without any consideration having been given to his reasons for seeking privacy or anonymity.
“In general, such applications should be dealt with promptly by the FTT when they are made, and should not be deferred.”
And, in a separate Upper Tribunal judgment in relation to the Dettori case, the judges pointed out: “It is not the application for privacy which leads to publicity (if a privacy application is refused) but the choice to bring a tax appeal (or any other civil proceedings). Seeking privacy or anonymity in relation to that appeal may create an additional risk of publicity as a practical matter, but, again, that is the applicant’s informed decision to bring the appeal, in a system where open justice is the norm.”
Frankie Dettori’s statement
In his statement, published on the Racing Post, Dettori said: “A few years ago, I employed the services of professional specialist tax advisers to look after mine and my family’s financial affairs.
“A structure was created and I was told that it had been approved by HMRC. Years later HMRC is now challenging that structure. My former advisers have since been dismissed.
“My new advisers and management team are working hard to unravel the mess that I have been put in. They are also working closely with HMRC to resolve the matter as swiftly as possible.”
Referring to Dettori’s dispute with HMRC over a tax bill, the Racing Post reported the jockey is said to have paid the bill “in full” before the decision on his anonymity was overturned.
What taxpayers and tax agents can learn from the Frankie Dettori tax dispute
The tax landscape has seen major changes over the last few years, and it’s important to bear that in mind when you hear about historical tax cases that are now being heard in the courts. The legal system is slow and much of what we’re seeing now relates to structures that were considered aggressive but legitimate in the past.
However, if a high-profile individual gets involved in a tax structure or tax scheme, they run the risk of the arrangement becoming public and the details being published by the media. This has happened in the past to comedians, pop stars, TV personalities, etc.
Lifting of anonymity order is “no surprise”
It’s no surprise the anonymity order has been lifted in the Frankie Dettori case. The reality is that if a taxpayer carries out tax planning they believe to be legitimate at the time, but which HMRC later challenges, they can decide at that point to settle with the tax authority and prevent the details becoming public.
But if they choose to instead appeal HMRC’s position, there’s no real reason why their identity should be protected simply because they have “celebrity” status. There’s also the question of why someone would want their identity protected if they’ve done nothing wrong.
The risks of backing the “wrong horse”
It’s not our place to judge any taxpayer due to decisions they’ve made in the past when the landscape was very different to the one that exists today. The case will be decided on the rules in place at the point the planning was undertaken and, ultimately, if the taxpayer loses, they’ve simply backed the wrong horse (pun intended!).
Allowing a taxpayer to retain anonymity throughout a tax appeal flies in the face of the changes in recent years to make both taxpayers and their agents more accountable for their planning.
At Churchill Taxation, we’d never encourage a high-profile taxpayer to think it’s OK to carry out aggressive tax planning because they can rely on anonymity. There are risks with any planning and taxpayers must consider potential reputational harm when arranging their financial affairs.
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