Angad Paul was being investigated for fraud when he killed himself in 2015
The son of a billionaire Labour peer was being investigated over a celebrity film tax fraud when he jumped to his death from a penthouse balcony.
Angad Paul, the son of steel magnate Lord Paul, gave money to a millionaire film producer who exploited tax laws to pocket vast sums of investor cash and tried to net £2.4m in a rebate scam involving F1 racing documentaries.
Terence Potter, 57, set up film companies and recruited wealthy investors by promising they could secure tax relief against any losses incurred, creating diaries to embellish their roles in production.
Father-of-two Mr Paul was among nine investors who put as much as £400,000 into the bogus company, which was being probed by HMRC when he jumped from his rooftop home in Portland Place in November 2015, while his children played inside.
He held a keen interest in film and was an executive producer on Lock, Stock And Two Smoking Barrels.
Potter, a former tax partner at Ernst & Young LLP, enlisted certified financial planner Neil Williams-Denton to help him set up the swindle and get additional investors on board.
They produced the indie hit ‘Starsuckers’ about celebrity culture and the tabloid press, and planned to create ‘Mercedes the Movie,’ a thriller about motor racing on the French Riviera, but this was never actually made.
Potter – who was living in Monaco at the time of the original frauds – admitted conspiracy to cheat the public revenue, while Williams-Denton was convicted of the charge after a nine-week trial in December 2015, a month after Mr Paul’s death.
Mr Paul jumped from his rooftop home in Portland Place across from the BBC in November while his children played in the penthouse flat
He has since admitted creating another partnership, Formula 1 LLP, purporting to make documentaries about famous Formula One drivers.
Potter drafted false diaries for investors to sign, lying to HMRC in order to dishonestly satisfy the criteria enabling them to claw back fraudulent tax rebates.
Nine investors each paid between £63,000 and £400,000, investing a total of £1,171,000.
Losses of £6,017,910 were then submitted in the tax years 2007-08 and 2008-09 which would have netted the members a total of £2,406,454 had the ruse been successful.
A government scheme known as ‘sideways relief’, launched by the then Chancellor of the Exchequer Gordon Brown in his 1997 budget to promote the British film industry, allowed investors to claim back 40% of the company’s losses from their Pay as You Earn tax.
Earlier this year Potter was ordered to pay back £1.8million in addition to £123,000 in costs.
Potter was the brains behind Cardiff’s Aquarius Films – which holds distribution rights to George Clooney’s 1999 blockbuster ‘Three Kings’ – and was jailed for eight years over his role in the scam in 2015.
Mr Paul was the son of steel magnate and Labour peer Lord Paul
But he escaped further punishment at Southwark Crown Court on Monday after admitting a third con using identical methods, under the guise of making documentaries about famous racing drivers.
Prosecutor Jane Bewsey, QC, said: ‘This case concerns the setting up and operation of Formula One Limited Liability Partnership (LLP).
‘The stated purpose of F1 LLP was to develop documentaries about famous F1 racing drivers.
‘In reality, it was a vehicle for cheating the Revenue.’
The court heard the legislation at the time allowed members of an LLP to claim a share of its losses against their own income.
If the LLP made a loss, substantial tax rebates could be claimed by members so long as certain requirements had been met.
A crucial aspect of those requirements was that each member was ‘active’ in the partnership, meaning they spent on average 10 hours per week personally engaged in commercial activities for trading purposes.
Ms Bewsey explained that paper and electronic diaries were compiled to show each of the nine members had satisfied the requirement.
‘These diaries were entirely false and were created under the direction and control of Mr Potter,’ she said.
‘Mr Potter knew from the outset that none of the members would satisfy the requirements and did not task them with any activity, but was prepared to fabricate documents should HMRC question their involvement.
‘Given his background, he knew an HMRC enquiry was likely.’
In early 2008, nine investors signed up and became members, each handing over between £63,000 and £400,000, investing a total of £1,171,000.
‘They were drawn to the investment by the tax advantages on offer,’ continued Ms Bewsey.
‘The F1 LLP Business Plan offered them ‘tax savings estimated at £40,000 for every £20,000 of net cash subscription’.
‘In other words, they were told they could double their money.
‘As high-earners liable to pay considerable amounts in tax this was a significant attraction.’
Potter later submitted tax returns for the partnership claiming losses in the tax years 2007-08 and 2008-09 of £6,017,910.
A two-year investigation by HMRC followed, in which the lies of five of the investors who signed the forged diaries ‘were maintained and co-ordinated’ while four refused to participate in the scam.
The other investors, aside from Mr Paul, who were allegedly involved in the submission of false diaries will stand trial next April.
Terence Potter (left) admitted conspiracy to cheat the public revenue, while Neil Williams-Denton (right) was convicted of the charge after a nine-week trial in December 2015
Had the ruse gone smoothly, the members would have submitted returns claiming the share of losses allocated to them in the partnership returns.
Each would then have claimed an amount of tax back.
The total in relief for all nine partners would have been £2,406,454.
‘In other words, they would have doubled their money through the tax system, as promised,’ said Ms Bewsey.
Judge Martin Beddoe said this third scheme allowed Potter to ‘succeed in corrupting a further nine investors and in which you attempted collectively with them, and persistently with most of them, on the face of it to cheat the Revenue of that further £2.4million’.
But taking that and his apparent lack of remorse the judge came to the conclusion that there was no need to extend Potter’s time behind bars after questioning whether the case would have come to court if he and his PA had been the only defendants identified.
Potter, formerly of West Riverside, Manchester, was handed no separate penalty after admitting conspiracy to cheat the Revenue but was banned from being a company director for eight years.
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