Hillgrove, who had strenuously denied the charges was found guilty In just over two hours as the jury came to a unanimous verdict that he had dishonestly failed to make returns for VAT and PAYE to HMRC for his limited company Hillgrove Public Relations Limited.
Hillgrove remains on bail and will be sentenced at Bristol Crown Court at a further hearing pending a report from the Probation Service.
HMRC decided to bring criminal charges against Mr Hillgrove in 2012 when his company Hillgrove PR failed to pay £43,000 owed in PAYE and an outstanding sum related to VAT of £52,000. At the same time, he also owed back taxes from a previous firm, RJH Management, that he operated as a limited liability partnership with his wife Lois.
The prosecution highlighted the celebrity PR’s extravagant spending on flowers, hotels, luxury goods and private school fees while the money he owed to HMRC went unpaid.
“Failure to pay debts is dishonest,” said prosecution QC Joss Ticehurst in his summing up earlier in the week. Hillgrove admitted in court that his spending was out of control, but said it was necessary to sustain a lifestyle that put him on an equal footing to his celebrity clients and contacts. The prosecution also highlighted Hillgrove’s spending on sex toys for a racy book launch as a “somewhat dubious level of spending”
Hillgrove argued that he had been singled out by HMRC because of his high profile and accused HMRC inspector Paul Harding of colluding with his previous accountant Michelle Bishop, in submitting a suspicious activity report to the Serious Organised Crime Agency, which at the time was responsible for investigating money-laundering offenses.
Hillgrove also argued, in an exclusive interview with us in Business Matters at the time, that the manner of his arrest was “[ilink url=”https://www.bmmagazine.co.uk/news/10511/dragons-den-pr-guru-to-sue-hmrc-for-wrongful-arrest/”]heavy handed and Nazi like and that he intended to sue for wrongful arrest[/ilink] “.
Michelle Bishop’s Wells-based firm Bishop Jones took on Hillgrove as a client in 2010 and helped him negotiate a six-month “time to pay” repayment schedule with HMRC for RJH Management LLP’s outstanding £52,000 tax debt in January 2011.
But as the September 2011 repayment deadline neared Bishop Jones incorporated a new limited company for him, Hillgrove Public Relations. Under HMRC regulations, however, the existing tax debts could not be switched to the new organisation.
When Hillgrove switched to a new accountant in January 2012 – partly on the advice of James Caan, he told the court – Bishop filed the suspicious activity report (SAR) the following day with the Serious Organised Crime Agency in her capacity as money laundering reporting officer for Bishop Jones.
The SAR mentioned yet another company called Land of the Long White Cloud, that Bishop said was originally set up as a phoneix company. “Due to ties with Downing Street, this was not actioned…” she wrote.
“In view of the excessive tax liability of RJH Management LLP,” the accountant voiced concern in her report that Mr Hillgrove used the transfer of his business to Hillgrove PR “to disguise the true level of tax liability.”
The existence of this document led to his criminal prosecution. For all his efforts to spin the facts of his case in his favour, Hillgrove was unable to convince the jury that HMRC had influenced the contents of this document.
This is one of the first occasions we have seen the mechanics of the money laundering regulations at work. Under the rules, accountants are required by law to report any suspicions the encounter in the course of their work that someone may have access to illicit gains. The money laundering regulations put accountants in the unenviable position of having to inform on their clients to the authorities. And in rare instances such as this, they may find themselves in the spotlight, with their integrity and professionalism called into question.
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