R v Dimsey; R v Allen COURT OF APPEAL (CRIMINAL DIVISION) [2000] QB 744, [1999] STC 846, [2000] 3 WLR 273, [2000] 1 Cr App Rep 203 HEARING-DATES: 27, 28, 29 April, 7 July 1999 7 July 1999 CATCHWORDS: Cheating the public revenue -- Tax evasion -- Scheme involving use of companies incorporated outside United Kingdom tax on profits and benefits to shadow director -- Companies administered outside United Kingdom by one of accused -- Companies controlled in United Kingdom by shadow director -- Accused administering companies convicted of conspiring with shadow director to cheat public revenue -- Another United Kingdom resident shadow director controlling other companies incorporated outside United Kingdom convicted of cheating public revenue -- Whether convictions safe -- Whether omission to disclose profits of companies constituted offence of cheating public revenue -- Taxes Management Act 1970, s 108. Cheating the public revenue -- Tax evasion -- Scheme involving use of companies incorporated outside United Kingdom to evade United Kingdom tax on profits and benefits to shadow director -- Companies administered outside United Kingdom by one of accused -- Companies controlled in United Kingdom by shadow director -- Failure to disclose profits of companies and benefits to shadow director -- Accused administering companies convicted of conspiring with shadow director to cheat public revenue -- Whether conviction of accused administering companies safe -- Whether jury properly directed regarding test of management and control in determining whether companies resident in United Kingdom and therefore liable to United Kingdom tax. Cheating the public revenue -- Tax evasion -- Scheme involving use of companies incorporated outside United Kingdom to evade United Kingdom tax on profits and benefits to shadow director -- Companies administered outside United Kingdom by one of accused -- Companies controlled in United Kingdom by shadow director -- Failure to disclose profits of companies and benefits to shadow director -- Accused administering companies convicted of conspiring with shadow director to cheat public revenue -- Another United Kingdom resident shadow director controlling other companies incorporated outside United Kingdom convicted of cheating public revenue -- Whether convictions safe -- Whether income of companies deemed to be income of individuals for income tax remaining income of companies for corporation tax -- Income and Corporation Taxes Act 1988, ss 9, 739(2), 831(1)(b). Cheating the public revenue -- Tax evasion -- Scheme involving use of companies incorporated outside United Kingdom to evade United Kingdom tax on profits and benefits to shadow director -- Companies controlled in United Kingdom by shadow director -- Failure to disclose profits of companies and benefits to shadow director -- Shadow director convicted of cheating public revenue -- Whether conviction safe -- Whether liable as shadow director to tax on benefits in kind and living accommodation provided by companies -- Income and Corporation Taxes Act 1988, ss 19, 145, 154, 167, 168. Cheating the public revenue -- Tax evasion -- Scheme involving use of companies incorporated outside United Kingdom to evade United Kingdom tax on profits and benefits to shadow director -- Companies controlled in United Kingdom by shadow director -- Failure to disclose profits of companies and benefits to shadow director -- Shadow director convicted of providing false schedule of assets omitting shares in companies incorporated outside United Kingdom held by discretionary trusts and assets of those companies -- Whether conviction safe -- Whether trust assets at disposal of shadow director -- Whether jury properly directed as to genuineness of trusts. HEADNOTE: D, who was resident in Jersey and who provided financial services, including the formation of companies incorporated outside the United Kingdom for clients and the administration of such companies for a fee, formed companies in Jersey to deal with contracts which C, who was resident in the United Kingdom, had obtained. The relevant contracts were signed in Jersey by D on behalf the companies. C was the beneficial owner of the shares in the companies and was closely involved in their day-to-day profit making activities in the United Kingdom. The Revenue commenced an investigation of C's tax affairs. C consulted D on the content of correspondence with the Revenue in the course of the investigation. D was charged with C in the Crown Court at Guildford of the common law offence of conspiracy to cheat the public revenue. The prosecution contended that D's participation in the Revenue's investigation thereby enabled D to monitor replies to the Revenue with a view to concealing the extent of C's financial affairs and tax liabilities arising from his involvement with the Jersey companies, which the Revenue considered were managed and controlled in the United Kingdom by C and were therefore liable to corporation tax on their profits, and that D had conspired to pretend that C did not have the management and control of the business of the companies in order to give the false impression that the companies were not resident in the United Kingdom. D and C were convicted of the offence of conspiracy to cheat the public revenue. A was charged in the Crown Court at Knightsbridge on a number of counts of cheating the public revenue of corporation tax and income tax by concealing or failing to disclose profits made by companies incorporated outside the United Kingdom which were managed and controlled by him in the United Kingdom, and concealing or failing to disclose personal income from the companies and the provision of living accommodation by the companies within s 145 and benefits within s 154 of the Income and Corporation Taxes Act 1988. The Crown contended, inter alia, that A's income and assets were held by companies incorporated outside the United Kingdom, that the properties in which he and his family lived were bought and sold in the name of those companies, and that those companies were used to pay for personal expenditure, including holidays, school fees and ordinary household expenses. A was also charged with having provided a false schedule of assets during the course of the investigation on the ground that he had omitted his beneficial interest in certain shares issued by, and in properties and bank accounts held in the names of, companies incorporated outside the United Kingdom. Those shares appeared to belong to two discretionary trusts set up in Gibraltar and Jersey respectively, the only named beneficiaries of which were two charities. There was power to appoint additional beneficiaries but it had not been exercised. A was convicted on 13 counts of cheating the public revenue. D and A appealed against conviction contending, inter alia, that the common law offence of cheating the public revenue could not be committed where there was only an omission unless it was in breach of a duty imposed by the law on the defendant, that the only duty to notify the Revenue of a company's liability to corporation tax was owed under s 108 of the Taxes Management Act 1970 by the 'proper officer', who was the secretary or person acting as secretary of the company, and that neither A nor C filled that role. D also contended that the judge had misdirected the jury on the meaning of the test of management and control in determining whether the companies incorporated outside the United Kingdom and owned by C were resident in the United Kingdom, since the jury might have concluded from the judge's reference to management as meaning the day-to-day running of the business of the company and control as referring to the making of policy decisions that it was sufficient for the prosecution to prove that C was closely involved in the day-to-day profit making activities of the companies in the United Kingdom, and that the jury might have been further misled by the judge's occasional references to management and control of the companies, in contrast to the businesses of the companies, into concluding that the companies were resident in the United Kingdom because C owned the share capital of those companies. D and A further contended that, under s 739(2) of the 1988 Act, which dealt with the prevention of the avoidance by individuals ordinarily resident in the United Kingdom of liability to income tax by means of transfer of assets by virtue of which income became payable to persons resident outside the United Kingdom, the income of the companies, which, as companies incorporated outside the United Kingdom, were by s 742(8) to be treated for the purposes of s 739 as if they were resident outside the United Kingdom, was in each case deemed respectively to be the income of C and A; it followed that the income was deemed also not to be the income of the companies, none of the companies was liable to corporation tax in respect of such income, and there was accordingly no evidence on which D could properly have been found guilty of conspiracy to cheat the public revenue, and A could properly have been found guilty of cheating in relation to corporation tax or income tax. A also contended that s 154, which provided that, where a person was employed in employment to which the Chapter applied, and by reason of his employment specified benefits were provided for him or his family, there was to be treated as emoluments chargeable to tax under Sch E an amount equal to the cash equivalent of the benefit, did not apply to him as a person in accordance with whose directions or instructions the directors were accustomed to act (a shadow director), who was not in receipt of any actual emoluments, for the following reasons. (i) The definition of 'employment' in s 168(2) as meaning an office or employment the emoluments of which fell to be assessed under Sch E was subject to a territorial limitation so that s 154 did not apply to benefits provided by a foreign employer for a foreign employee; s 168(2) had therefore to be construed as limited to actual emoluments within s 19 and one or more of the Cases thereunder, and, accordingly, did not apply to a shadow director who was only in receipt of benefits which were to be treated as emoluments under s 154. (ii) The extended definition of director in s 168(8), which included shadow directors, did not imply that a shadow director held an office, a shadow director was not therefore within the definition of employment in s 168(2), and was, accordingly, not employed in employment as a director within s 167(1)(a) to which the charge under s 154 applied. (iii) The extended definition of director in s 168(8) applied for the purposes of Ch II of Pt V of the 1988 Act and did not apply to the Sch E charge under s 19 in Pt I of the Act. Finally, A contended that the broad terms of the two discretionary trusts and the fact that they held bearer shares, which the judge in his direction to the jury had categorised as unusual, did not indicate that the trusts were a sham. The Crown contended, inter alia: (i) that the issue laid before the jury in relation to management and control of the companies incorporated outside the United Kingdom was whether C or D or another person was in reality managing and controlling those companies, and that the question of control of a company by shareholders was not raised; (ii) that the deeming provision in s 739(2) only had effect 'for all the purposes of the Income Tax Acts' which were defined by s 831(1)(b) as meaning the enactments relating to income tax, including any provisions of the Corporation Tax Acts which related to income tax, that the deeming provision was not extended to corporation tax by s 9(1)i, which provided that the amount of income for corporation tax should be computed in accordance with income tax principles, and that the practice was not to exact tax from the transferor and the transferee; (iii) that by virtue of s 145(8)(b) the references to employment and director in s 145 were to be construed in accordance with s 168, and the provision of living accommodation for A as a shadow director therefore fell within s 145; and (iv) that, in respect of the charge that A had provided a false schedule of assets, the jury had been directed that the question was whether A was the true beneficial owner of the shares, the properties and the bank balances, and whether the two trust deeds were genuine or a sham. Held -- (1) The offence of cheating the public revenue was constituted by any form of fraudulent conduct which had the purpose and effect of depriving the Revenue of money due to it. It was obvious that any failure by a proper officer to perform his duty under s 108 could not relieve the company of its liability to corporation tax. If an individual, who had total de facto control of a company, so arranged its affairs that the company made profits but did not declare them to the Revenue, he was cheating the Revenue. The position was even stronger if the company had been established to operate in that way. In the instant case the intention of A and C respectively to cheat the Revenue, in each case by deliberately declining to notify the Revenue of company profits which they knew or believed would be taxable and would not be disclosed by the proper officer or anyone else was (as the jury in each case must have accepted) a deliberate course of conduct designed and intended to defraud the Revenue of tax due. The secretary's statutory duty did not render the conduct either less deliberate or less dishonest. Moreover, the instant cases did not involve mere omission, but were concerned with deliberate plots including overt acts in the way, inter alia, of correspondence, to bring about a state of affairs in which the Revenue was to be defrauded. The submissions of D and A on that aspect of the case would therefore be rejected. (2) The test of management and control was composite, and was designed to identify where decisions of fundamental policy were made as opposed to the place where the day-to-day profit earning activities were undertaken. In the instant case it was therefore undesirable for the judge in his direction to the jury to have split the concept of management and control of a company and his references to the daily activities of the business of the company could theoretically have been misleading. It was, however, vital that the judge's directions should be considered as a whole. In the light of the issue left to the jury, namely whether or C or D or another person was in reality managing and controlling the companies, they could not have thought that, merely because the day-to-day profit earning activity had been undertaken by C in England, the companies were resident in the United Kingdom. Moreover, since the question of control of a company by shareholders was never argued before the jury and was never mentioned by the judge, it would not have occurred to the jury to conclude that, because C was the beneficial owner of the shares in the companies, those companies were resident in the United Kingdom. In the light of the factual issue left to the jury, there had therefore been no misdirection with regard to the test of management and control. (3) The deeming provision in s 739(2) had effect 'for all purposes of the Income Tax Acts'. It followed that it had no impact on the actual or potential liability to corporation tax of a company which for the purposes of the subsection constituted a person resident outside the United Kingdom. Moreover, the fact that under s 9(1) the amount of any income for the purposes of corporation tax was to be computed in accordance with income tax principles did not extend the deeming provision in s 739(2) beyond its terms to affect corporation tax. Further, there was nothing self-contradictory in the proposition that the income belonged to the transferee but was also deemed by s 739(2) to belong to the transferor. The purposes of the statutory fiction in the subsection did not include the extinction of liability to corporation tax of a transferee company incorporated outside the United Kingdom. Furthermore, if a situation arose in which the Revenue, contrary to their plain statement to the court, decided to exact tax from the transferor and the transferee, that decision could be challenged as an abuse of power. Dicta of Nourse J in IRC v Metrolands (Property Finance) Ltd [1981] STC 193 at 208, as cited by Peter Gibson J in Marshall (Inspector of Taxes) v Kerr [1993] STC 360 at 364, applied. Dicta of Lord Wilberforce in Vestey v IRC [1980] STC 10 at 18-19 considered. (4)(a) Section 154 treated the cash equivalent of the benefit to which it applied as emoluments of the employment and 'accordingly chargeable to income tax under Schedule E'. However, those emoluments were only to be assessed if they were within one or more of the Cases under Sch E, which themselves imposed a territorial limitation. It followed that the definition of employment in s 168(2) as an office or employment the emoluments of which fell to be assessed under Sch E was subject to the territorial limitation imposed by those Cases. In the instant case A's benefits, which were deemed to be emoluments under s 154, were received in the United Kingdom, and they therefore fell to be assessed under Sch E for the purposes of applying the definition of employment in s 168(2). (b) By virtue of s 168(8) 'director' included shadow directors, and the definition of employment in s 168(2) included an office. A shadow director was therefore deemed to hold an office as director. It followed that a shadow director was employed in employment as a director of a company within s 167(1)(a) to which s 154 applied. (c) The effect of s 154 was to deem the cash equivalent of the benefit to which the section applied to be 'emoluments of the employment and accordingly chargeable to income tax under Schedule E'. The statutory fiction under s 154 had to be applied to s 19, and there was no warrant for imposing any further requirement that the emoluments should derive from an actual office, before the cash equivalent of the benefit was subject to charge under Sch E. Accordingly, A, as a shadow director, was liable to tax on benefits which fell within s 154. (5) Section 145 applied where a person was provided with living accommodation by reason of his employment. By virtue of s 145(8)(b) the definition of employment in s 168(2) as an office or employment and of director in s 168(8) were applied to the meaning of employment in s 145. The combined operation of s 168(2) and (8) had the effect that the holder of an office included a shadow director. The provision of living accommodation for A as shadow director therefore fell within s 145. (6) The width of the discretionary trusts and the existence of bearer shares among the trust assets were not indicative of anything sinister in the trust documents, and so far as the judge had suggested otherwise, he should not have done so. However, that criticism of the summing-up had to be viewed in context. The plain fact was that, if the jury found that A was the beneficial owner of the relevant assets, they must inevitably have convicted him on the count relating to the alleged false schedule of assets. They were fairly directed to that effect. Moreover, there was in fact overwhelming evidence that the assets were A's to dispose of as he wished, that he treated them as such, and that there was no question of the trustees possessing any real power or discretion in the matter. It was therefore impossible to conclude that the jury might have been misled by the judge's mistaken emphasis on the width of the trusts and the presence of bearer shares among the assets. The appeals of D and A would therefore be dismissed. NOTES: For cheating the public revenue, see Simon's Direct Tax Service A3.1504. For the responsibility of company officers, see ibid, A3.302. For the meaning of the residence of a company, see ibid, D4.102, 104. For the anti-avoidance provisions applying to transfer of assets abroad by individuals, see ibid, E1.721-740. For employments affected by the charge on benefits in kind, see ibid E4.602-603. For the Taxes Management Act 1970, s 108, see ibid, Part G2. For the Income and Corporation Taxes Act 1988, ss 9, 19, 145, 154, 167, 168, 739(2), 831(1)(b), see ibid Part G1. CASES-REF-TO: De Beers Consolidated Mines Ltd v Howe (Surveyor of Taxes) [1906] AC 455, 5 TC 198, HL. Edwards (Inspector of Taxes) v Clinch [1981] STC 617, [1982] AC 845, [1981] 3 All ER 543, 56 TC 367, HL. IRC v Metrolands (Property Finance) Ltd [1981] STC 193, [1981] 1 WLR 637, [1981] 2 All ER 166; affd [1982] STC 259, [1982] 1 WLR 341, [1982] 2 All ER 557, 54 TC 679, HL. Marshall (Inspector of Taxes) v Kerr [1993] STC 360, CA; rvsd [1994] STC 638, [1995] 1 AC 148, [1994] 3 All ER 106, 67 TC 56, HL. R v Bembridge (1783) 22 St Tr 1. Snook v London and West Riding Investments Ltd [1967] 2 QB 786, [1967] 1 All ER 518, CA. Taxpayer, Re (1993, unreported), Special Commissioners' Decision F1 3099/93 and 3100/93. Vestey v IRC (Nos 1 and 2) [1980] STC 10, [1980] AC 1148, [1979] 3 All ER 976, 54 TC 503, HL; varying Vestey v IRC [1977] STC 414, [1979] Ch 177, [1977] 3 All ER 1073 and Vestey v IRC (No 2) [1978] STC 567, [1979] Ch 198, [1979] 2 All ER 225. Cases referred to in skeleton arguments A-G's Ref (No 1 of 1975) [1975] QB 773, [1975] 2 All ER 684, CA. Bye (Inspector of Taxes) v Coren [1986] STC 393, 60 TC 116, CA. Calcutta Jute Mills Co Ltd v Nicholson (Surveyor of Taxes) (1876) 1 TC 83, Ex Ch. Cape Brandy Syndicate v IRC [1921] 1 KB 64, 12 TC 358; affd [1921] 2 KB 403, CA. Company, Re a [1985] BCLC 333, CA. Craven (Inspector of Taxes) v White [1988] STC 476, [1989] AC 398, [1988] 3 All ER 495, 62 TC 1, HL. Fitzwilliam (Countess) v IRC [1993] STC 502, [1993] 1 WLR 1189, [1993] 3 All ER 184, 67 TC 614, HL. Furniss (Inspector of Taxes) v Dawson [1984] STC 153, [1984] AC 474, [1984] 1 All ER 530, 55 TC 561, HL. H (restraint order: realisable property), Re [1996] 2 All ER 391, CA. Hitch v Stone (Inspector of Taxes) [1999] STC 431. IRC v Brackett [1986] STC 521, 60 TC 134. IRC v McGuckian [1997] STC 908, [1997] NI 157, [1997] 1 WLR 991, [1997] 3 All ER 817, 69 TC 1, HL. IRC v Plummer [1979] STC 793, [1980] AC 896, [1979] 3 All ER 775, 54 TC 1, HL. Laidler v Perry (Inspector of Taxes) [1966] AC 16, [1965] 2 All ER 121, 42 TC 351, HL. Little Olympian Each Ways Ltd, Re [1995] 1 WLR 560, [1994] 4 All ER 561. Liverpool and London and Globe Insurance Co v Bennett (Surveyor of Taxes) [1913] AC 610, 6 TC 327, HL. Lord Advocate v McKenna [1989] STC 485, 61 TC 688, CS. Luke v IRC [1963] AC 557, [1963] 1 All ER 655, 40 TC 630, HL. Manisty's Settlement, Re [1974] Ch 17, [1973] 2 All ER 1203. R v Alford (JF) Transport Ltd [1997] 2 Cr App R 326, CA. R v Anderson (1992) 13 Cr App R (S) 564, CA. R v Bourne (1952) 36 Cr App R 125, CCA. R v Chalkley [1998] QB 848, [1998] 2 All ER 155, CA. R v Charlton [1996] STC 1418, 67 TC 500, CA. R v Cogan [1976] QB 217, [1975] 2 All ER 1059, CA. R v Hudson [1956] 2 QB 252, [1956] 1 All ER 814, CCA. R v Hunt [1994] STC 819, 68 TC 132, CA. R v Inspector of Taxes, ex p Clarke [1974] QB 220, [1972] 1 All ER 545, 47 TC 691, CA. R v Jefferson [1994] 1 All ER 270, CA. R v Lawrence [1982] AC 510, [1981] 1 All ER 974, HL. R v Less & Depala (2 March 1993, unreported), CA. R v Litanzios (30 July 1998, unreported), CA. R v Macdonald (1998) 6 Archbold News 1, CA. R v Mavji [1986] STC 508, [1987] 1 WLR 1388, [1987] 2 All ER 758, CA. R v Mullen (1999) Times, 15 March, CA R v Redford (1988) 89 Cr App R 1, CA. R v Simpson (1993) 99 Cr App R 48, CA. R v Tonner [1985] 1 WLR 344, [1985] 1 All ER 807, CA. Steele v Paz Ltd (in liq) [1995] 1 Butterworths Offshore Cases and Materials: Cases 338, IOM, Staff of Government Division. Union Corp Ltd v IRC [1952] 1 All ER 646, CA; affd [1953] AC 482, [1953] 1 All ER 729, 34 TC 207, HL. Unit Construction Co Ltd v Bullock (Inspector of Taxes) [1960] AC 351, [1959] 3 All ER 831, 38 TC 712, HL. INTRODUCTION: On 21 March 1997 in the Crown Court at Guildford before His Honour Judge Addison and a jury Dermot Jeremy Dimsey, the first appellant, was convicted (by a majority of ten to two) of the offence of conspiracy to cheat the public revenue. On 19 February 1998 in the Crown Court at Knightsbridge before His Honour Judge Hordern and a jury Brian Roger Allen, the second appellant, was convicted on 13 counts of cheating the public revenue of income and corporation tax by concealing or failing to disclose profits made by offshore companies which were managed and controlled by him in the United Kingdom. Each appellant appealed against his conviction by leave of the single judge. The facts are set out in the judgment of the court. COUNSEL: Robert Venables QC, Peter Doyle and Amanda Hardy for Dimsey; Alan Newman QC and James Kessler for Allen; Peter Francis Rook QC, Jonathan Fisher and Timothy Brennan for the Crown. JUDGMENT-READ: Cur adv vult 7 July. The following judgment was delivered. PANEL: LAWS LJ, MOSES J, HIS HONOUR JUDGE CRANE JUDGMENTBY-1: LAWS LJ JUDGMENT-1: LAWS LJ: This is the judgment of the court, to which all three members have contributed. On 21 March 1997, before His Honour Judge Addison in the Crown Court at Guildford, Dermot Jeremy Dimsey was convicted (by a majority of ten to two) upon what was count three of an amended indictment of the offence of conspiracy to cheat the public revenue. On 30 April 1997 he was sentenced to 18 months' imprisonment. He had served his sentence before his appeal was listed for argument in this court. There were two co-accused, Chipping and Da Costa. On 23 January 1997 Chipping pleaded guilty to eight counts of the common law offence of cheating the public revenue. On 21 March 1997 he was convicted upon two further counts of cheating the public revenue, and also (along with Dimsey) of the conspiracy. On 30 April 1997 he was sentenced to eight concurrent terms of 12 months' imprisonment in respect of the charges to which he had pleaded guilty, and also to three concurrent terms in respect of the offences of which he had been found guilty by the jury, so that his total sentence was one of three years' imprisonment. He has not applied for leave to appeal. Da Costa was also on 21 March 1997 found guilty of the conspiracy, and on 30 April 1997 was sentenced to 12 months' imprisonment. He has abandoned his application for leave to appeal against conviction. On 19 February 1998, before His Honour Judge Hordern in the Crown Court at Knightsbridge, Brian Roger Allen was convicted upon 13 substantive counts of cheating the public revenue of income tax and corporation tax by concealing or failing to disclose profits made by offshore companies which were managed and controlled by him in the United Kingdom. On 20 February 1998 he was sentenced to 13 concurrent terms of seven years' imprisonment. A confiscation order was made against him pursuant to s 71 of the Criminal Justice Act 1988 in the sum of £3,137,165, with a consecutive term of seven years' imprisonment in default. Each appellant now appeals against his conviction by leave of the single judge. Dimsey: the facts Chipping was a man of 56 who had worked in the avionics industry for many years. Da Costa was 41, a solicitor and partner in Stuart Wallace and Co in Gerrards Cross. He was retained by Chipping to act for him in a Revenue investigation which began in 1993. Dimsey was aged 52, resident in Jersey. He ran a company called DFM Consultants Ltd (DFM) in St Helier. DFM provided various financial services, including the formation of offshore companies for clients and the administration of such companies for a fee. In 1987 Mr Adam, consultant to Racal Avionics, was approached in South Africa about the possible supply of avionic equipment from Germany to a company in South Africa, Hurbarn Electronics Ltd (Hurbarn). Such supply was contrary to sanctions then in force against South Africa. The South Africans wished to deal with an intermediary rather than direct with the manufacturer. Mr Adam contacted Chipping. He asked Chipping whether he was interested in being involved in such supply and Chipping confirmed that he was. Mr Adam subsequently introduced Chipping to Mr Chalklin of Astronautics GmbH of Munich, who were to supply the equipment. Mr Adam arranged two meetings in London between Mr Chalklin and Chipping. Mr Adam then dropped out of the picture and Chipping took over as the middleman. There were at least three further meetings between Mr Chalkin and Chipping. Mr Chalkin dealt mostly with Chipping, but also communicated with Dimsey in Jersey by telephone and fax. Between 1985 and 1993 Dimsey by arrangement received bank statements on Chipping's personal and savings accounts held at the Royal Trust Bank (Jersey) Ltd (Royal Trust Bank), which he passed to Chipping from time to time either personally in Jersey or by post on Chipping's instructions. Dimsey formed two companies, Thomlyn Supplies Ltd (Thomlyn) and later Glenville Supplies Ltd (Glenville), to deal with the contracts which Chipping had obtained. The relevant contracts were signed in Jersey by Dimsey on behalf of the companies. Dimsey applied on behalf of Thomlyn and Glenville for credit cards for Chipping's use principally for personal expenditure; Dimsey arranged for payment of the credit card liabilities by the companies. Mr Adam received commission from Thomlyn for his introductory services. At Chipping's suggestion, Mr Adam flew to Jersey late in 1988 or early in 1989 to collect an advance payment of £25,000. He was introduced to Dimsey by Chipping at Dimsey's office. There was discussion between Chipping and Dimsey about business matters. Then Mr Adam, accompanied by Dimsey and Chipping, went to the bank where Dimsey had arranged for £15,000 to be available in cash for Mr Adam. Later, when Chipping informed Mr Adam that the contracts had been completed, Mr Adam again visited Jersey. His further commission was paid into an account in Jersey administered by Dimsey. During his dealings with Chipping, Mr Adam contacted Chipping about six times on his home telephone number; he would contact Chipping to resolve problems. On one occasion he spoke to Dimsey about a delay in the establishment of a letter of credit. Mr Adam thought that Dimsey was Chipping's accountant. He thought that Thomlyn and Glenville were effectively one and the same. Mr Barnes of Hurbarn regarded Chipping as the middleman for the placing of the order and for the shipping, operating through Thomlyn and Glenville. Mr Barnes dealt with Chipping at Thomlyn by fax and telephoned him at his home. He spoke to Dimsey, who appeared to deal with Thomlyn's finance, about a letter of credit. He dealt with Chipping about increased prices, the letter of credit and his commission. He dealt only with Chipping about the condition of the goods. It was Chipping who refused to change the shippers. He sent details of the export licence to Chipping and Dimsey sent a fax to him requesting that Chipping should not be mentioned in that connection. In cross-examination on behalf of Dimsey, he said he thought that Chipping worked full-time for Thomlyn and/or Glenville and that there was no difference between those companies. There were six contracts for supplies by Astronautics GmbH to Thomlyn, four of which were channelled by the suppliers through a Swiss intermediary, Parago. There were eight contracts for supplies to Glenville, none involving Parago. A freight company operated by Allen usually dealt with the transport. The profits made by Thomlyn were £664,057, in respect of which £220,000 in corporation tax was allegedly due. The profits made by Glenville were £582,000, in respect of which £175,000 in corporation tax was allegedly due. Some of the equipment for the Glenville contracts was obtained by Chipping from Omni Aviation Ltd (Omni). Mr Brian Alexander of Omni dealt only with Chipping over the actual supply of items to Thomlyn and Glenville. Mr Alexander visited Jersey and was introduced by Chipping to Dimsey, who paid Omni's bill. Chipping required Omni to use Allen for transport. Mr Alexander received about £30,000 in commission from Thomlyn and Glenville, which was paid into a bank account at the Royal Trust Bank in Jersey. The supply of other equipment was obtained by Chipping from a company called Sperry in the United States of America, but Sperry would not deal directly with Glenville. The Mann Group sold US$742,400 worth of equipment to Glenville between February 1990 and April 1992, having purchased it from Sperry. The Mann Group received commission of US$61,000. A third company, Lantau Investments Ltd (Lantau) was acquired by Dimsey. It was not a trading company. It was the prosecution case that Chipping used this company to receive some of the profits of the contracts, which were used by Lantau to acquire a flat in the United Kingdom for Chipping's daughter. It was the prosecution case that Dimsey administered Lantau for Chipping and that although nominee directors and shareholders were appointed for Lantau, the company was managed and controlled by Chipping from his home and office in England. On 7 March 1990 US$194,066 was in fact paid from a bank account in Thomlyn's name at the Algemeine Bank in Switzerland into a bank account in Lantau's name. In September 1990 a flat at Milford was bought by Lantau for £50,000. Da Costa acted as solicitor for Lantau. Chipping viewed the flat and gave the impression that he was buying it for his daughter. Chipping's daughter occupied the flat. In March 1993 Chipping told Mr Hibbert, his financial adviser, that his daughter lived in a flat owned by a Jersey trust which he had set up in Jersey and that the total assets of the trust were valued at £200,000. Subsequently Chipping asked Mr Hibbert to delete the reference to the Jersey trust from his records. In March 1993 there was a total balance of £154,631 in the Lantau bank account. In interview Chipping said that he had received £200,000 as a reward for services which he had undertaken on behalf of Thomlyn and Glenville and that this sum was held on trust in Jersey. Chipping was a 50:50 partner with Mr Brian Alexander in a joint venture company called Chaltech Aviation Ltd. Chipping's shares were issued to Lantau. In due course Lantau purchased Mr Alexander's shares. The sum of £50,000 held in a bank account in the name of Chaltech on account of commission paid to Chipping was subsequently paid into a Lantau bank account. Chipping held four accounts at the Royal Trust Bank in Jersey in which a total of £40,000 had been invested. He received interest of over £6,000 between 1985 and 1991. These accounts were administered by Dimsey for Chipping. An unexplained payment of £21,920 in relation to which Chipping pleaded guilty was paid into one of these accounts. The Revenue started an investigation into Chipping's tax affairs after information was received from Germany about Astronautics GmbH. Miss Christine Barclay, a Revenue officer, interviewed Chipping and three directors of the Mann Group on 21 September 1993. Chipping said that he had never heard of Thomlyn and had nothing to do with Glenville. As part of her inquiries Miss Barclay had already interviewed Mr Adam. It was Mr Adam's evidence that he was interviewed by the Revenue in May 1993 after Dimsey had told him what to say. Dimsey told him not to mention Chipping's name, but to say that Dimsey was in charge of Thomlyn. He told Mr Adam to suggest that he had met Mr Adam in London. Mr Adam thought that implausible, and it was agreed at his suggestion that he would say that he had met Dimsey through an American contact. Mr Adam gave this account to the Revenue. Dimsey telephoned Mr Adam after his meeting with the Revenue. Dimsey appeared relieved on being told that Chipping's name had not been mentioned. In cross-examination on behalf of Dimsey, Mr Adam made certain concessions. He accepted that he had been confused about whether Chipping had been a director of Thomlyn. He agreed that when he met the Revenue there was a danger that he might be forced to speculate about the roles of individuals in the transaction. He agreed that it was a possibility, although it had not occurred to him, that the mood of his meeting with Dimsey was that Dimsey told him not to volunteer Chipping's name or speculate about his full role, because if he speculated he might make mistakes. He agreed that 'If you're not asked about Chipping, don't mention him' was virtually what Dimsey said. He accepted that Dimsey told him he could inform the Revenue that he (Dimsey) was his contact in Jersey and was in control in Jersey. He accepted that what Dimsey told him reflected his understanding of the true position. In re-examination Mr Adam said that Dimsey had told him that he (Dimsey) was running Thomlyn. He found it difficult to say whether Dimsey had put it on the basis 'If you're not asked about Chipping, don't mention him'. The suggestion that he (Mr Adam) had met Dimsey in London was made because Dimsey did not want Chipping's name to come up in connection with the inquiry and Thomlyn. Chipping and Da Costa were involved in drafting letters to the Revenue. Dimsey was sent draft letters by them and his comments sought. He responded. Dimsey was also asked to provide information about the corporate history and structure of the offshore companies. The letters submitted to the Revenue by Da Costa on Chipping's behalf were misleading in that they suggested that the South African business started when Dimsey telephoned Chipping. The letters stated that Chipping's role was as consultant with Thomlyn and Glenville. The letters made no mention of three of the Royal Trust Bank accounts, the credit cards or Lantau. On 1 October 1993 Chipping wrote to Dimsey requesting copies of the Royal Trust Bank statements in relation to one of the four bank accounts. Dimsey confirmed on 5 October 1993 that an account had been opened at the Royal Trust Bank in Jersey on 11 October 1985. Copy bank statements were sent by Dimsey to Chipping on 18 October 1985. On 16 October 1993 Chipping sent Dimsey some notes which were to be passed to Da Costa with a view to responding to the Revenue. In his notes Chipping stated that Thomlyn had been formed in order to further discussions with a customer in relation to a business opportunity. Dimsey checked the notes and made some alterations, to make it appear that Thomlyn had been incorporated to transact certain types of aviation business. The text was designed to minimise Chipping's role in Thomlyn and Glenville. On 15 November 1993 Chipping and Da Costa visited Dimsey's offices in Jersey and examined files. Da Costa then prepared a draft disclosure letter on 18 November 1993 which he sent to Chipping and Dimsey for approval. The letter included reference to one of the four Royal Trust Bank accounts. The deposit account, the dollar account and the current account into which £21,920 had been paid were not mentioned. The letter stated that Chipping had received only two BMW cars and £3,000 from Thomlyn and Glenville. It suggested that Chipping had first become involved when Dimsey had telephoned him to say that he had a client, Thomlyn, and wondered if he could help in respect of a transaction which Thomlyn was undertaking. On 29 November 1993 Chipping faxed to Da Costa amendments to the draft disclosure letter. A copy was faxed to Dimsey on 1 December. Dimsey sent to Da Costa notes made by Chipping, with his own comments and amendments. Dimsey commented: 'I need to clarify with Brian who negotiated the deal with Parago, as I would not wish Parago to provide details to the Revenue of the initial transaction being negotiated with Brian.' The prosecution contended that the second reference to 'Brian' was to Chipping, but Chipping accepted in cross-examination on behalf of Dimsey that the reference was to Brian Allen. Da Costa produced a second draft of a letter to be sent to the Revenue dated 2 December 1993. This letter contained the reference to one of the bank accounts at the Royal Trust Bank in Jersey. On 3 December Chipping sent a fax to Da Costa from Dimsey's offices, signed by Dimsey, which included the following passage: 'In my conversations with Dermot today we both feel that the reference to the Royal Trust Bank account is still a touchy matter to discuss. Is there anything else we can say or alternatively can we dispense with the paragraph?' In a letter dated 10 December 1993 written on Chipping's behalf by Da Costa to Miss Barclay, Chipping told the Revenue that the South African business started when Dimsey phoned Chipping, which was untrue. The letter omitted to disclose the existence of any of the Royal Trust Bank accounts, of Lantau and/or £200,000 held in a Jersey trust, or of the use by Chipping of credit cards in the names of Thomlyn and Glenville. Da Costa denied in cross-examination on behalf of Dimsey that a copy of this letter was sent to Dimsey. On 16 December 1993 Chipping confirmed at a meeting with Miss Barclay in the presence of Da Costa that all points relevant to his tax affairs had been included in his income tax returns. Chipping said that he did not have any interest in any companies other than the Mann Group. Dimsey continued to be consulted by Chipping and Da Costa on the content of correspondence with the Revenue in respect of Chipping's financial affairs. It was the prosecution case that this enabled him to monitor and vet replies with a view to covering up the extent of Chipping's financial affairs and the extent of Chipping's tax liabilities arising from his involvement with Thomlyn and Glenville. On 24 May 1994 Miss Barclay wrote to Chipping asking for a certificate of complete disclosure. On 8 July 1994 Da Costa replied that Chipping had nothing further to add and that everything had been previously disclosed. Chipping's case was that he was only a consultant to the offshore companies. He did not know what profits they made. He denied receiving £200,000 and the existence of a trust fund, although he had made admissions when interviewed by the Revenue. The letters written to the Revenue were designed to put off having to make full disclosure. Da Costa's case was essentially that he was acting on Chipping's instructions and had no personal knowledge of the matters. He realised that some matters were not being disclosed to the Revenue, but that did not in the circumstances amount to deception. Dimsey was not interviewed. He did not give evidence at the trial. The case argued on his behalf was that it was legitimate for him to manage and control companies registered in Jersey. Chipping was merely a consultant to Thomlyn and Glenville. Even if Chipping controlled and managed Lantau, that company did not make profits. He had reason to think that Max Braendli, who lived in Switzerland, was the owner. Thomlyn had a Swiss bank account. He had reason to think that Chipping wanted to hide his activities from his previous employers at Mann Avionics. The sole purpose of any false or misleading documents was to avoid the sanctions against South Africa, not to cheat the Revenue. He had no reason to concern himself with the tax affairs of Chipping, who had a solicitor acting for him. Allen: the facts Allen is a man of 50, a successful businessman involved in a series of different activities. It was the prosecution case that his income and assets were held by offshore companies. The properties in which he and his family lived were bought and sold in the name of offshore companies. Offshore companies were used to pay for personal expenditure, including holidays, school fees and ordinary household expenses. There were 13 offshore companies, incorporated at various dates between 1978 and 1992 in Jersey or Liberia. Five of the companies were used as vehicles by Allen for controlling and managing his portfolio of properties, which had a total value of £2,083,325. The companies were administered by Dimsey through DFM in Jersey. They had bank accounts in Jersey, administered by Dimsey for Allen in accordance with Allen's instructions. Dimsey and his office undertook administrative work relating to the offshore companies and Allen's personal assets. It was the prosecution case that Allen himself managed and controlled the companies in the United Kingdom. That aspect of the prosecution case is not challenged for the purposes of this appeal. Amongst the papers recovered from DFM in Jersey was a schedule of assets purporting to show Allen's assets in July 1993. It listed the bank balances of the offshore companies and the Rock Settlement as assets of Allen. The net balance was approximately £750,000. Numerous draft letters were recovered showing that Allen was giving instructions to Dimsey to send letters on behalf of the offshore companies. When Allen's home address, Warleys, was searched in February 1995, there were found numerous detailed cash statements and lists in respect of the offshore companies, cheque books in respect of the companies where blank cheques had been signed by the authorised signatories, and bank statements of the companies annotated by Allen. There was evidence that Allen paid the directors' fees of certain of the offshore companies. Da Costa undertook most of the property transactions for Allen. The facts relating to the individual counts can be summarised shortly. Counts one to seven concerned profits made by the offshore companies. Count one concerned Meldrette Investments Ltd, which made the most substantial profits, over £5m, on which over £2m in corporation tax was alleged to be due. Counts two to seven concerned Colander Investments Ltd, Peche d'Or Investments Ltd, Tanin Holdings Ltd, Berkshire Investments Ltd, Escorin Investments Ltd and Iles Investments Ltd. Counts eight to ten, twelve and thirteen related to failures to declare personal income and benefits received by Allen from the offshore companies. Counts eight and nine alleged incomplete returns. Counts ten, twelve and thirteen related to an absence of returns. It is sufficient to summarise the kinds of income and benefits received. Meldrette provided £80,000 in premium bonds to the Allen family. Warleys, the house in which the Allen family lived, was held in the name of Peche d'Or. Allen and members of his family had credit cards in the names of Meldrette and Peche d'Or, which were used to pay household and personal bills and for holidays and education. School fees for four of Allen's children were paid by Peche d'Or. Count eleven concerned a schedule of assets provided by Allen to the Revenue during a Hansard investigation into his affairs. The schedule did not list certain shares in the offshore companies, bank accounts of those companies and properties of those companies. Those assets purported to belong to two discretionary trusts, the Rock Settlement and the Burberry Settlement, set up in Gibraltar and Jersey in 1979 and 1988 respectively. The only named beneficiaries were the Red Cross and Oxfam. There was power to appoint additional beneficiaries, but the power had not been exercised. The issue placed before the jury at the trial was whether the two trust deeds were genuine or a sham. The shares of the various companies were held by individuals or others described as nominees of the trustees of the two settlements. The 'no duty to disclose' point (both appeals) It was submitted to us on behalf of both appellants that the offence of cheating the Revenue in principle cannot be made out where the alleged actus reus consists only in an omission, unless the omission is in breach of a duty imposed by the law on the defendant. Mr Newman QC for Allen went so far as to contend that this was a general principle of the criminal law: there can be no crime by omission unless there is a duty to act. He would no doubt accept that that position might be altered by statute; but cheat is a common law crime. It is convenient first to summarise the statutory provisions relevant to this argument's application in these appeals. Section 6(1) of the Income and Corporation Taxes Act 1988 (the 1988 Act) provides: 'Corporation tax shall be charged on profits of companies'. Section 10(1) of the Taxes Management Act 1970 requires a company which is chargeable to corporation tax but which has not made a return to give notice to the tax inspector that it is so chargeable. Section 10(2) and (3) provide for monetary penalties where no notice is given. Section 108(1) of the Taxes Management Act 1970 provides in part: 'Everything to be done by a company under the Taxes Acts shall be done by the company acting through the proper officer of the company'. Section 108(3)(a) provides: 'the proper officer of a company which is a body corporate shall be the secretary or person acting as secretary of the company'. It is submitted that the only duty to notify the Revenue of the relevant company's liability to corporation tax was owed under s 108 by the 'proper officer': and neither Allen nor Mr Chipping filled that role; and so, it is said, neither appellant (in Dimsey's case, through the conspiracy route) can be fixed with any criminal liability, however much they knew, and however much they set out to conceal. In our judgment this argument has no merits. It is obvious that any failure by the proper officer to perform his s 108 duty cannot relieve the company of its liability to corporation tax under s 6(1) of the 1988 Act. If an individual, having total de facto control of a company, so arranges its affairs that the company (a) makes profits but (b) does not declare them to the Revenue, he is obviously cheating the Revenue. A fortiori if the company is actually established to operate in this way. Here, the case made by the Crown was that the appellant Allen and Dimsey's co-defendant Chipping themselves intended to cheat the Revenue, in each case by deliberately declining to notify the Revenue of company profits which they knew or believed (a) would be taxable and (b) would not be disclosed by anyone else -- proper officer or otherwise. This was (as the jury in each case must have accepted) a deliberate course of conduct designed and intended to defraud the Revenue of tax due. The fact that s 108 of the Taxes Management Act 1970 imposes an express duty on the company secretary to make the relevant disclosure is neither here nor there. The secretary's statutory duty does not render the conduct here in question either less deliberate, or less dishonest. It is nothing but a red herring. So is the more general proposition that no omission can amount to a cheat unless it is in breach of duty. The offence of cheat is perfectly simple: it is constituted by any form of fraudulent conduct having the purpose and effect of depriving the Revenue of money due to it. In any event it is simply artificial, on the facts which we have recounted, to suggest that these were cases of mere omission. These were deliberate plots, involving overt acts in the way of correspondence and so forth, to bring about a state of affairs in which the Revenue was to be defrauded. Mr Rook QC for the Crown has referred to much authority. We do not find it necessary to set out any of it, save a citation from Lord Mansfield in R v Bembridge (1783) 22 St Tr 1 at 155: 'So long ago as the reign of Edward the 3d, it was taken to be clear that an indictment would lie for an omission or concealment of a pecuniary nature, to the prejudice of the king ...' The appellants' submissions on this part of the case, if they were accepted, would provide nothing but a licence for cynical and deliberate tax evasion. We reject them without hesitation. The 'central management and control' point (Dimsey's appeal) In his first ground of appeal the appellant Dimsey submits that the judge misdirected the jury as to the correct test for determining whether Thomlyn, Glenville and Lantau were resident in the United Kingdom. It is contended that the jury may have reached its conclusion that these three companies were resident in the United Kingdom in the erroneous belief that it was sufficient for the prosecution to prove that because Chipping was closely involved in the day-to-day profit making activities of Thomlyn and Glenville within the United Kingdom, those companies were resident in the United Kingdom. Alternatively, they may have concluded that, as owner of the share capital of the company, Chipping controlled the company in the United Kingdom. The law There was no dispute between the Crown and Dimsey as to the true test of residence. A company is resident where the central management and control of its business abides. For nearly a century the test enunciated by Lord Loreburn LC has been applied. In De Beers Consolidated Mines Ltd v Howe (Surveyor of Taxes) [1906] AC 455 at 458, 5 TC 198 at 213 he said that -- '... a company resides for purposes of income tax where its real business is carried on ... and the real business is carried on where the central management and control actually abides.' The paradigm of central management and control of the business of the company is the exercise of such management and control by directors of a company sitting as a board. Residence will be where the board habitually meets and decides matters of fundamental policy. The test of corporate residence must, therefore, be distinguished from questions as to: (a) the control of the company itself. Shareholders control the company, directors exercise central management and control over the business of the company. In the case of a limited liability company owned by shareholders they will collectively have the power to ensure that the affairs of the company are conducted in accordance with their wishes, exercising that power through general meetings of the company but they do not exercise central management and control of the business of the company. (b) where the business of the company is carried on or where its profits are earned. There are many decisions in tax cases in which the conclusion has been reached that a company was resident in the United Kingdom although all profits were earned in far-away countries. The summing-up The judge directed the jury as follows: 'The test of whether a company is resident in the UK is whether its real business is carried on here. The real business of the company is carried on where the central management and control are exercised. Management and control are two different words having slightly different meanings. Management for these purposes means the day-to-day running of the business of the company. Control refers to the making of policy decisions and exercising the final say in business matters. The word central means overall or top-level. The prosecution case is that although these companies were registered in Jersey, their business was really conducted by Mr Chipping and he conducted it in this country. The defence case is that the companies were not only registered in Jersey but their real business was conducted by Mr Dimsey in Jersey and that Chipping was only a consultant. If that is correct, then they were not subject to UK corporation tax. You must look at the circumstances concerning each of these companies and decide whether the prosecution have made you sure that they were centrally managed and controlled in the UK rather than in Jersey or elsewhere. The test is where they were in fact centrally managed and controlled, not where they should have been managed or where they appear to have been managed. So what matters should you look at when applying this test? These are some suggestions. Firstly, what did the business of the company in fact consist of? Secondly, what role was played by each individual in the running of that business? Thirdly, where did the people running the business carry it on? Where did they hold their meetings and make their decisions? Where were the contracts discussed? Where were telephone calls made from and where was correspondence sent? Fourthly, where was the administrative work of the company conducted? Where were the records kept? Fifthly, where were the company bank accounts held, and in particular, from where were instructions sent to those banks? You may think that for the most part Mr Chipping carried on his activities in England although he did go to Jersey from time to time. Mr Dimsey, on the other hand, was mainly in Jersey. You may think that possibly the simplest way of formulating a test in the circumstances of this case is are you sure that Chipping was in reality managing and controlling these companies or may it have been Dimsey or some other person or persons?' This passage is criticised because, it is said, it was likely to lead the jury to believe that it was sufficient to prove that Chipping was concerned with the day-to-day running of the business. The combination of the distinction the judge made between management and control and the questions he suggested the jury should ask themselves were likely to divert the jury from the central issue, namely where the high policy in relation to the business of the company was determined. It led them to focus, erroneously, on the many activities which Chipping undertook in the United Kingdom. We agree that it was undesirable for the judge to split the concept of management and control. The test is composite; it is designed to identify where decisions of fundamental policy are made as opposed to the place where the day-to-day profit earning activities are undertaken. Further, we agree that the series of questions the judge asked, taken on their own, directed as they were to the daily activities of the business, could theoretically be misleading. However, it is vital that the directions are considered as a whole. It is not permissible to criticise sections of the summing-up without regard to their overall effect in the context of the facts of the case. The factual issues in the case centred on the question whether it was Dimsey who managed and controlled the companies, with Chipping merely acting as a consultant who undertook work in England on behalf of the companies. The jury were presented with a simple choice. There was no subtle distinction between the function of Dimsey and the function of Chipping. So long as the prosecution could satisfy the jury so that it was sure that Chipping was not a consultant but in fact not only undertook the day-to-day running of the business but made all the decisions whilst Dimsey carried out the functions of administration in Jersey, no sophisticated or difficult questions of central management and control arose. This simple issue was clearly laid before the jury by the judge: 'You may think that for the most part Mr Chipping carried on his activities in England although he did go to Jersey from time to time. Mr Dimsey, on the other hand, was mainly in Jersey. You may think that possibly the simplest way of formulating a test in the circumstances of this case is are you sure that Chipping was in reality managing and controlling these companies or may it have been Dimsey or some other person or persons?' Before reminding the jury of the detailed evidence of Chipping's activities in the United Kingdom the judge returned to the essential factual dispute: 'Members of the jury, I shall remind you shortly of the evidence of the people who were involved in the details of how the contracts were carried out. The prosecution case is that Mr Chipping was really the linchpin of the whole business, that he had both the technical expertise and the business and financial knowledge to negotiate and carry out these contracts. They say that effectively he simply used Thomlyn and Glenville to do his business for him, that those companies were just convenient facades or fronts set up for the purpose. The defence case is that those companies were or at least may have been genuine trading companies controlled at least in Jersey and that Mr Chipping was merely a consultant.' The judge summarised the evidence as to the activities of the companies in relation to the contracts to which he referred. It emerged that Dimsey signed the contracts, arranged for Mr Adams' commission to be collected from the bank, chased late payments and dealt with invoices. In the light of the issue left to the jury it is not possible in our judgment to entertain the idea that the jury may have thought that merely because the day-to-day profit earning activity had been undertaken by Chipping as a consultant in England the companies were resident there. We reject that criticism of the summing-up. Further criticism is advanced to the effect that the judge confused control of the companies with control of the business. It is true that from time to time in his summing-up he referred to central management and control of the companies as opposed to central management and control of the business of the companies. It is contended on behalf of Dimsey that the jury may have been misled into concluding that the companies were resident in the United Kingdom because Chipping was the beneficial owner of the shares in the companies. Again we reject that criticism. The question of control by shareholders of a company was never argued before the jury. It was never mentioned by the judge. Accordingly, we do not think that it would have even occurred to the jury to conclude that because Chipping was the beneficial owner of shares in the company those companies were resident in the United Kingdom. We refer, again, to the way in which the judge dealt with the essential factual argument before the jury. Read in the light of that factual issue we do not think there was any misdirection in the respect here contended for. We reject the first ground of appeal. The s 739 point (both appeals) We understand the Revenue to accept that s 739(2) of the 1988 Act, which we shall shortly set out, applied on the facts in both appeals, so that the income of the offshore companies was in each case deemed respectively to be the income of Chipping and Allen. But it is contended for the appellants that, in consequence, the income in question is thereby deemed also not to be the income of the companies. If that is right, then none of the companies was liable to any corporation tax in respect of such income: it was not their income. It is said that that has the following results. (1) There was no evidence on which Dimsey could properly have been found guilty of the conspiracy with which he was charged. The evidence showed (as the jury must have found) that he conspired to pretend that Chipping did not have the central management and control of the business of the three companies in question, in order to give the false impression that the companies were not resident in the United Kingdom. But the only point in doing so would be to avoid corporation tax chargeable against the companies. Since the companies were not liable to corporation tax, there was no actual or potential loss to the Revenue which could possibly flow from the conspiracy in which Dimsey took part. But it is a constituent element of the common law offence of cheating the Revenue that there should exist such an actual or potential loss. In its absence there could be no cheat, and therefore no conspiracy to cheat: there can be no criminal conspiracy unless it is shown that the alleged conspirators agreed to bring about a state of affairs which would itself amount to a crime. (2) There was no evidence on which Allen could properly have been found guilty of the 'corporation tax counts' in the indictment laid against him (see counts one to seven). The Crown's case was that he had dishonestly concealed the fact that he had the central management and control of the businesses of the companies in question in his case, again in order to give the false impression that the companies were not resident in the United Kingdom. But, as in the Dimsey appeal, the only point in doing so would be to avoid corporation tax chargeable against the companies. Since the companies were not liable to corporation tax, Allen's alleged (and proved) dishonesty could not have led to any actual or potential loss to the Revenue, so that, for want of an essential element in the offence, he could not be guilty of cheat. (3) Nor could Allen have properly be found guilty on the 'income tax counts' (see counts eight to ten and twelve to thirteen): the money from which the benefits in question were derived was, by operation of s 739, his own, and he is plainly not liable to income tax on benefits which he has paid for himself. Section 739 of the 1988 Act provides so far as relevant as follows: '(1) ... the following provisions of this section shall have effect for the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income tax by means of transfer of assets by virtue or in consequence of which, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled outside the United Kingdom. (2) Where by virtue or in consequence of any such transfer, either alone or in conjunction with associated operations, such an individual has, within the meaning of this section, power to enjoy, whether forthwith or in the future, any income of a person resident or domiciled outside the United Kingdom which, if it were income of that individual received by him in the United Kingdom, would be chargeable to income tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be income of that individual for all purposes of the Income Tax Acts.' Section 741 provides: 'Sections 739 ... shall not apply if the individual shows ... to the satisfaction of the Board either -- (a) that the purpose of avoiding liability to taxation was not the purpose or one of the purposes for which the transfer or associated operations or any of them were effected; or (b) that the transfer and any associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation ...' Section 742, so far as relevant, provides: '(2) An individual shall, for the purposes of section 739, be deemed to have power to enjoy income of a person resident or domiciled outside the United Kingdom if -- [five sets of circumstances are then set out, at least one of which -- at para (d) -- shows that the "power to enjoy" may be contingent on events outside the control of the individual having the power, who may possibly never receive the income in question or any benefit derived from it] ... (8) For the purposes of sections 739 to 741, any body corporate incorporated outside the United Kingdom shall be treated as if it were resident outside the United Kingdom whether it is so resident or not.' Section 743, so far as material, provides: '(1) Income tax at the basic rate or the lower rate shall not be charged by virtue of section 739 in respect of any income to the extent that it has borne tax at that rate by deduction or otherwise but, subject to that, income tax so chargeable shall be charged under Case VI of Schedule D ... (4) Where an individual has been charged to income tax on any income deemed to be his by virtue of section 739 and that income is subsequently received by him, it shall be deemed not to form part of his income again for the purposes of the Income Tax Acts.' Section 744(1) provides: 'No amount of income shall be taken into account more than once in charging tax under the provisions of sections 739 ... and where there is a choice as to the persons in relation to whom any amount of income can be so taken into account -- (a) it shall be so taken into account in relation to such of them, and if more than one in such proportions respectively, as appears to the Board to be just and reasonable ...' Section 831, the interpretation section, is important. Subsection (1) provides: 'In this Act, except so far as the context otherwise requires -- (a) "the Corporation Tax Acts" means the enactments relating to the taxation of the income and chargeable gains of companies and of company distributions ... (b) "the Income Tax Acts" means the enactments relating to income tax, including any provisions of the Corporation Tax Acts which relate to income tax.' In light of a submission advanced by Mr Venables QC for Dimsey, it is also necessary to set out s 9(1) of the 1988 Act: 'Except as otherwise provided by the Tax Acts, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.' As we have foreshadowed, the sole question for determination on this part of the case is whether s 739(2) has effect to deem the income of the relevant person resident outside the United Kingdom not to be his income, as well as deeming it to be the income of the individual or individuals having 'power to enjoy' it. Mr Venables (whose argument was adopted by Mr Newman for Allen) submitted that the section should not be read as empowering the Revenue to tax the same income twice. In our judgment this point is concluded in the Revenue's favour on the true construction of the 1988 Act. The deeming provision in s 739(2) has effect 'for all purposes of the Income Tax Acts'. It cannot, therefore, have effect for any other purpose. The 'Income Tax Acts' are defined by s 831(1)(b), which we have set out. This definition and that of the 'Corporation Tax Acts' are, plainly, mutually exclusive. In our judgment it follows that the deeming provision contained in s 739(2) has no impact whatsoever on the actual or potential liability to corporation tax of a company which for the purposes of s 739(2) constitutes a person 'resident ... outside the United Kingdom'. Mr Venables sought to refute this conclusion by reference to s 9(1) of the 1988 Act. He submitted, as is plainly the case, that this subsection incorporates 'income tax principles' into the provisions relating to corporation tax, so that income tax principles have to be applied for the ascertainment of a company's chargeable income for the purposes of corporation tax. Upon this he sought to build the further proposition that by virtue of the application of income tax principles, the effect of s 739(2) is that the relevant offshore company is taken to have a nil income. But this is a non sequitur. The fact that income tax principles fall, by virtue of s 9(1), to be applied in the ascertainment of a company's liability to corporation tax cannot have the consequence that the scope of the deeming provision in s 739(2) is wider than the subsection states, that is (reading in the s 831(1)(b) definition) 'for all purposes of [the enactments relating to income tax, including any provisions of the Corporation Tax Acts which relate to income tax]'. In short (as was submitted by Mr Brennan, junior counsel for the Crown) the deeming provision does not affect corporation tax. Mr Venables also submitted that a deeming provision such as that contained in s 739(2) must be taken to its logical conclusion, and its logical conclusion here entails that the income in question, once deemed to be that of the transferor, must therefore also be deemed to be not that of the transferee. He cited Marshall (Inspector of Taxes) v Kerr [1994] STC 638, [1995] 1 AC 148. But the entailment is false. There is nothing self-contradictory in the proposition that the income belongs to the transferee but is in addition deemed by s 739(2) to belong to the transferor. If that is an objectionable conclusion, it is so on grounds that a liability to taxation on the same income is generally objectionable; but that is an objection of policy, not logic (and as such it is one that we shall deal with directly). As regards Marshall (Inspector of Taxes) v Kerr, we would accept Mr Brennan's submission that the extinction of liability to corporation tax in the case of a s 739(2) transferee offshore company lies outside the purposes of the statutory fiction, and is not demanded by it. It seems to us that this conclusion is in line with what was said by Nourse J in IRC v Metrolands (Property Finance) Ltd [1981] STC 193 at 208, [1981] 1 WLR 637 at 646, cited with approval in the Court of Appeal by Peter Gibson J in Marshall (Inspector of Taxes) v Kerr [1993] STC 360 at 364: 'When considering the extent to which a deeming provision should be applied, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. It will not always be clear what those purposes are. If the application of the provision would lead to an unjust, anomalous or absurd result then, unless its application would clearly be within the purposes of the fiction, it should not be applied. If, on the other hand, its application would not lead to any such result then, unless that would clearly be outside the purposes of the fiction, it should be applied.' Certain prudential considerations militate also in favour of this conclusion. As we have pointed out in parenthesis in referring to s 742(2), the category of persons having the 'power to enjoy' is so widely drawn as to include individuals who may never receive the income in question or any benefit derived from it. It is possible that a case might arise in which the Revenue would thus be unable to collect income tax under s 739(2) and, if Mr Venables is right, neither would any corporation tax be due from the offshore company. Moreover Mr Venables' argument seems to us to entail the conclusion (as Mr Brennan submitted) that the statutory scheme might be manipulated so as to achieve the avoidance of corporation tax on the part of the offshore company: as for example by ensuring that liability was fixed upon an impecunious individual transferor. We acknowledge that this position gives rise, in theory at least, to the possibility of double taxation: for income tax against the individual tax-avoider who has transferred assets offshore, and for income tax or corporation tax against the person resident or domiciled out of the United Kingdom to whom assets have been transferred. But this is far from being the systematic result of our approach to s 739(2). It is important to notice that in such a situation the transferee's liability to tax is not, of course, created by s 739 and would only arise in the case of an offshore company if its central management and control is in the United Kingdom. Such a company is treated as resident outside the United Kingdom for the purposes of s 739 (see s 742(8)). However, it remains resident in the United Kingdom for the purpose of the charge to corporation tax. If the transferee company is not centrally managed and controlled in the United Kingdom, no liability to corporation tax could arise. Where the transferee is a natural person, his residence/domicile outside the United Kingdom will generally immunise him from any liability to income tax. In reply Mr Venables cited Vestey v IRC (Nos 1 and 2) [1980] STC 10, [1980] AC 1148. In that case the Revenue claimed that the predecessor of s 739 (s 412(2) of the Income Tax Act 1952) operated so as to deem the relevant income to be the income of a large number of trust beneficiaries, some of whom on the facts received relatively modest amounts from the discretionary trusts in question, and had certainly not been involved in the transfer of assets, done for the avoidance of tax, which had given rise to the section's application; yet, said the Revenue, they all had 'power to enjoy' given the breadth of that expression's scope (by virtue of what is now s 742(2)). And the Revenue asserted a right to tax any or some or all of them on the whole amount, which was very large, or any part of it. Lord Wilberforce said ([1980] STC 10 at 18-19, [1980] AC 1148 at 1172-1173): 'Taxes are imposed on subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer, and the amount of his liability is clearly defined. A proposition that whether a subject is to be taxed or not, or that, if he is, the amount of his liability is to be decided (even though within a limit) by an administrative body, represents a radical departure from constitutional principle. It may be that the Revenue could persuade Parliament to enact such a proposition in such terms that the courts would have to give effect to it; but unless it has done so, the courts, acting on constitutional principles, not only should not, but cannot validate it. The Crown's contentions to the contrary, however moderate and persuasive their presentation by leading counsel, fail to support the proposition. The Crown says that the income tax legislation gives the commissioners a general administrative discretion as to the execution of the Acts, and it refers to particular instances, of which one is s 115(2) of the Income and Corporation Taxes Act 1970 (power to decide period of assessment). The judge described the comparison of such limited discretions with that now contended for as "laughable". Less genially I agree. More generally, they say that s 412 imposes a liability on each and every beneficiary for tax in respect of the whole income of the foreign transferees; that there is no duty on the commissioners to collect the whole of this from any one beneficiary, that they are entitled, so long as they do not exceed the total, to collect from selected beneficiaries an amount decided on by themselves. My Lords, I must reject this proposition. When Parliament imposes a tax, it is the duty of the commissioners to assess and levy it on and from those who are liable by law. Of course they may, indeed should, act with administrative common sense. To expend a large amount of taxpayers' money in collecting, or attempting to collect, small sums would be an exercise in futility; and no one is going to complain if they bring humanity to bear in hard cases. I accept also that they cannot, in the absence of clear power, tax any given income more than once. But all of this falls far short of saying that so long as they do not exceed a maximum they can decide that beneficiary A is to bear so much tax and no more, or that beneficiary B is to bear no tax. This would be taxation by self-asserted administrative discretion and not by law. As the judge well said [see [1977] STC 414 at 439, [1979] Ch 177 at 197]: "One should be taxed by law, and not be untaxed by concession." The fact in the present case is that Parliament has laid down no basis on which tax can be apportioned where there are numerous discretionary beneficiaries.' In our judgment the Revenue's contentions as to s 739 in this case bear no resemblance whatever to their stance excoriated by the House of Lords in Vestey. There is a theoretical liability to double taxation. We were told that the practice is not to exact tax twice. We wholly accept that the subject is not to be taxed by discretion. Were a situation to arise in which, contrary to their plain statement to this court, the Revenue sought in a s 739 case to exact tax both from the transferor (or other person with 'power to enjoy') and the offshore transferee, the High Court might be invited to prohibit it as an abuse of power. (Section 744(1), which we have set out, shows that the Revenue may not take into account more than once any amount of income in charging tax under s 739, that is, against persons having 'power to enjoy'.) On this part of the case Mr Newman had an additional argument based on art 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (Rome, 4 November 1950; TS 71 (1953); Cmd 8969), but it added nothing. The 'shadow director' point (Allen's appeal) Introduction Counts eight, nine, ten, twelve and thirteen alleged that the appellant Allen had omitted to declare benefits in kind and the provision of living accommodation between 1989 and 1995. Allen contends that as a shadow director he was not liable to tax in respect of such benefits. If Allen is correct, his convictions for cheating the Revenue by failing to declare the benefits to which those counts refer were unsafe. The resolution of the issue is a question of pure statutory construction. Accordingly we now turn to the relevant statutory provisions. The statutory provisions relevant to the liability of a shadow director to tax on benefits '19 Schedule E (1) The Schedule referred to as Schedule E is as follows -- SCHEDULE E 1 Tax under this Schedule shall be charged in respect of any office or employment on emoluments therefrom which fall under one or more than one of the following Cases -- Case I: any emoluments for any year of assessment in which the person holding the office or employment is resident and ordinarily resident in the United Kingdom, subject however to section 192 if the emoluments are foreign emoluments (within the meaning of that section) ... Case II: any emoluments, in respect of duties performed in the United Kingdom, for any year of assessment in which the person holding the office or employment is not resident (or, if resident, not ordinarily resident) in the United Kingdom, subject however to section 192 if the emoluments are foreign emoluments (within the meaning of that section); Case III: any emoluments for any year of assessment in which the person holding the office or employment is resident in the United Kingdom (whether or not ordinarily resident there) so far as the emoluments are received in the United Kingdom; and tax shall not be chargeable in respect of emoluments of an office or employment under any other paragraph of this Schedule ... 5 The preceding provisions of this Schedule are without prejudice to any other provision of the Tax Acts directing tax to be charged under this Schedule and tax so directed to be charged shall be charged accordingly. (2) References in the Tax Acts to Cases I, II and III of Schedule E shall be taken as referring to the Cases under which tax is chargeable under paragraph 1 of that Schedule. (3) Part V contains further provisions relating to the charge to tax under Schedule E.' It should be noted, at this stage, that the charge on emoluments under Sch E is subject to territorial limitation under all three cases. Both ss 145 and 154 fall under Pt V, described as: 'PROVISIONS RELATING TO THE SCHEDULE E CHARGE'. But s 145 appears in Ch I headed 'SUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION' whereas s 154 appears in Ch II headed 'EMPLOYEES EARNING £8,500 OR MORE AND DIRECTORS'. Section 145 provides in part: '(1) Subject to the provisions of this section, where living accommodation is provided for a person in any period by reason of his employment, he is to be treated for the purposes of Schedule E as being in receipt of emoluments of an amount equal to the value to him of the accommodation for the period, less so much as is properly attributable to that provision of any sum made good by him to those at whose cost the accommodation is provided ... (8) For the purposes of this section -- ... (b) the expressions "employment" ... "director" ... shall be construed in accordance with subsections (2), (4) and (8) to (12) of section 168 as if this section were included in Chapter II of this Part.' Section 154 provides in part: '(1) Subject to section 163, where in any year a person is employed in employment to which this Chapter applies and -- (a) by reason of his employment there is provided for him, or for others being members of his family or household, any benefit to which this section applies; and (b) the cost of providing the benefit is not (apart from this section) chargeable to tax as his income, there is to be treated as emoluments of the employment, and accordingly chargeable to income tax under Schedule E, an amount equal to whatever is the cash equivalent of the benefit.' Before April 1989 Ch II was headed 'SUPPLEMENTARY CHARGING PROVISIONS APPLICABLE TO DIRECTORS AND HIGHER-PAID EMPLOYEES AND OFFICE HOLDERS' and the words 'employment to which this Chapter applies' in s 154(1) read 'director's or higher-paid employment'. By s 167(1): 'This Chapter applies -- (a) to employment as a director of a company (but subject to subsection (5) below), and (b) to employment with emoluments at the rate of £8,500 a year or more.' Interpretation provisions are contained in s 168: '(1) The following provisions of this section apply for the interpretation of expressions used in this Chapter. (2) Subject to section 165(6)(b), "employment" means an office or employment the emoluments of which fall to be assessed under Schedule E; and related expressions shall be construed accordingly ... (8) Subject to subsection (9) below, "director" means -- (a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or similar body; (b) in relation to a company whose affairs are managed by a single director or similar person, that director or person; and (c) in relation to a company whose affairs are managed by the members themselves, a member of the company, and includes any person in accordance with whose directions or instructions the directors of the company (as defined above) are accustomed to act. (9) A person is not under subsection (8) above to be deemed to be a person in accordance with whose directions or instructions the directors of the company are accustomed to act by reason only that the directors act on advice given by him in a professional capacity.' Mr Kessler, junior counsel for Allen, submits that a shadow director is not liable to tax upon benefits in kind because the provisions of s 154 only apply to a shadow director if: (a) he is in true employment, and (b) he has emoluments which are chargeable under Sch E. Thus, the provisions only have application to a person who is an employee with emoluments of £8,500 (originally £5,000 in 1976, raised to £8,500 in 1978, and never raised since) or to a shadow director who is an employee but has emoluments of less than £8,500. They have no application to a shadow director in the position of Allen who was not employed and had no emoluments at all. This submission rests upon three alternative arguments: (1) Even if the extended definition of director under s 168(8) has the effect that a shadow director is deemed to hold an office, he has no emoluments chargeable under Sch E. (2) The extended definition of director does not imply that a shadow director holds an office. (3) In any event the extended definition of director under s 168(8) has no application to s 19 which appears in Pt I of the 1988 Act. Allen's first argument focuses upon the reference in s 168(2) to: 'emoluments ... which fall to be assessed under Schedule E'. Allen, it is contended, had no such emoluments. The requirement is necessary in order to impose a territorial limitation. Absent such a limitation the section imposes a charge on benefits provided to a foreign employee by a foreign employer. The only way a territorial limitation can be imposed under s 154 is to construe s 168(2) as referring to actual emoluments coming within s 19 and one or more of the Cases thereunder. If a shadow director is only in receipt of benefits which are deemed to be emoluments under s 154, no territorial restriction exists. In support of that contention Mr Kessler relies upon a decision of the distinguished Special Commissioner Dr Avery Jones who concluded in the context of what is now s 145 that the purpose of the definition in s 168(2) was to provide the very territorial limitation which would otherwise be absent (see Re Taxpayer F1 SC 3099/93 and 3100/93). We do not agree. Section 154 imposes a charge upon the cash equivalent of the benefits to which s 154 applies by treating the cash equivalent of the benefit as emoluments of the employment and 'accordingly chargeable to income tax under Schedule E'. Assuming that Allen was an office-holder, he was in receipt of benefits the cash equivalent of which are emoluments chargeable under Sch E. However, those emoluments would only fall to be assessed if they fell within one or more of the Cases under Sch E. Those Cases themselves impose a territorial limitation. If the deemed emoluments are outwith those three Cases they will not fall to be assessed under Sch E, and accordingly the shadow director would not be within the definition of employment in s 168(2). The territorial limitation is imposed by the requirement in s 168(2) that the deemed emoluments fall to be assessed under Sch E. Allen's argument fails to give adequate weight to the wording of the requirement, which implies that there could be emoluments which did not fall to be assessed under Sch E, for example emoluments which do not fall within one of the three Cases. Although Allen was in receipt of emoluments chargeable to income tax under Sch E, he would not be in employment for the purposes of Ch II unless those emoluments fell to be assessed under Sch E. Allen's benefits were received in the United Kingdom. They did fall to be assessed under Sch E. We reject the first argument. Allen's second argument challenges the Revenue's concept of a deemed office-holder. It is plain that a shadow director does not in reality hold an office; there is no appointment and there can be no vacation of such a post (see Edwards (Inspector of Taxes) v Clinch [1981] STC 617 at 619-620, [1982] AC 845 at 861 per Lord Wilberforce). There is, so it is contended, no reference in the statutory provisions to a deemed office. In our judgment no such reference was required. Chapter II of Pt V applies to employment as a director (see s 167(1)(a)). Employment means an office or employment (see s 168(2)). Director has the extended definition given in s 168(8) which includes those who manage the affairs of a company who are not directors, and shadow directors. In our judgment since the word 'employment' in s 167(1)(a) means an office as well as employment properly so called and since the word 'director' includes those who are not directors, the application of the definition in s 168(2) and of the extended definition in s 168(8), to s 167(1)(a) has the effect of deeming those who fall within the extended definition of director to hold an office. The submission of Allen fails to give full effect to the meaning of 'employment' and 'director' in s 167(1)(a) as defined in s 168(2) and (8). By virtue of those two definitions a person who falls within the extended definition of director holds an office as director. Such a construction has the merit of giving content to s 168(9). If Allen is correct then the purpose of the extended definition of director is only to catch shadow directors who are employees with emoluments of less than £8,500. If the extended definition is so restricted it is difficult to see how anybody, whose directions or instructions were given in a professional capacity, would be caught under sub-s (8) and thus require exclusion under sub-s (9). So much is accepted by Mr Kessler, but he says that such a conclusion should not deflect us from acceptance of his submissions since it is clear that the exclusion in s 168(9) derived from s 94 of the Companies Act 1928 and subsequent consolidations. We prefer a construction which gives content to sub-s (9) and does not rely upon an accident of repetition. It is true, as Allen contends in his third argument, that ss 167 and 168, being within Ch II of Pt V, have no application to s 19 which refers under para 1 to 'any office or employment'. But in our judgment the effect of s 154 is to deem the cash equivalent of the benefit to which s 154 applies to be 'emoluments of the employment and accordingly chargeable to income tax under Schedule E'. The statutory fiction under s 154 must be carried through to s 19 and there is no warrant for imposing any further requirement, such as that the emoluments should derive from an actual office, before the cash equivalent of the benefit is subject to charge under Sch E. For these reasons we conclude that Allen as a shadow director was liable to tax on benefits which fell within s 154. The counts in the indictment cover both benefits to which s 154 applies and benefits consisting of the provision of living accommodation under s 145(1). Since the counts cover both, it is strictly unnecessary further to analyse the provisions of s 145 since the convictions would be safe even if the provision of living accommodation to Allen did not fall within s 145(1). But for the sake of completeness we should add that, in our judgment, the provision of living accommodation to this appellant as shadow director does fall within s 145. By virtue of s 145(8)(b), the definition of employment in s 168(2) and the extended meaning of director in s 168(8) are carried through to the meaning of employment in s 145. Section 145 applies where a person is provided with living accommodation by reason of the fact that he holds an office. For the reasons we have already given the combined operation of s 168(2) and (8) have the effect that the holder of an office includes one who falls within the extended definition of director. For those reasons, therefore, we conclude that Allen was in receipt of living accommodation chargeable to tax under s 145(1) because he was a shadow director. The 'Hansard' point (Allen's appeal -- count 11) As we have said the allegation here was that Allen provided a false schedule of assets during the course of a Hansard investigation. Allen was alleged to have omitted from the schedule his -- '... beneficial interest in shares issued by offshore companies, his beneficial interest in properties held in the names of offshore companies, and his beneficial interest in bank accounts held in the United Kingdom and in Jersey in the names of offshore companies.' His case was that all these items were properly omitted, because the shares were in truth the property of one or other of two discretionary trusts, the Rock Settlement and the Burberry Settlement, as was shown by the relevant trust deeds; and the property and bank accounts were beneficially owned by the offshore companies. The judge first directed the jury thus: 'But here the question is, was Mr Allen the beneficial owner the true owner of the shares, the properties and the bank balances in question? If he was then clearly the schedule of assets which he provided to the Revenue in answer to their enquiries was entirely wrong. If he appreciated that he should have declared [them] to the Revenue, then he was cheating the Revenue by failing to do so ... That is entirely right [viz that the assets belonged to the trusts] unless you are satisfied that the various very lengthy trust deeds you have seen are a sham, that is to say, documents which purport to show a legal situation which is other than the real one intending to give the appearance of creating legal rights different from the actual legal rights, if these trust deeds are a sham then it is open to you to find that the defendant was the beneficial owner of the various assets, knew that he was, and was cheating the Revenue in not disclosing the various [assets] in the schedule of assets which he was required to give them.' Mr Newman rightly made no criticism of this passage; it is entirely in accordance with Lord Diplock's description of the nature of a 'sham' transaction in Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802, which we need not set out. The judge returned to count 11. He said: 'So you have to decide about those trusts ... they are in virtually identical terms, one set up in Gibraltar [bearing] the date 26 February 1979 the other one set up in Jersey bearing the date 8 February 1988 it is said to you that the various [meaning the trust deeds] are perfectly standard discretion trusts. Yes and no. No doubt they are in a from very frequently used but you have seen that the only named beneficiaries are the Red Cross and Oxfam. You have seen that the trustees of each trust have the power to appoint additional beneficiaries ... So far as we are aware no deeds [sc appointment of further beneficiaries] have ever been executed ... you may think it extremely unusual for a person who is really wanting to put money into a trust not to specify at least the classes of people whom it is intended to benefit. Which grandfather will set up a trust in favour of ... any child reaching the age of 21 of his daughter ... so that the trustee can choose ... which child they benefit. [They] have a class of people and you may think that that is a good deal more usual than an open trust in which the trustee can benefit any person in the world that he wishes except a resident of Jersey. That is the way that formally these trusts are set up. But you may think that the real test is this; consider the trusts assets, it is said that [materials in the documents before the court] show the trust assets ... Again, yes and no if those documents are accurate. You will notice that ... the shares in Colander are $500 US$ bearer shares, and that ... the shares in Peche D'Or are $500 US$ shares. They are shares ... perhaps likely nowadays to be very very much out of fashion the reason being that they are like cash ... bearer shares are owned by the person who has them in his hand ... It is usual for bearer shares to be held in a bank ... to the order of a particular person. We don't know [where] they are. We do not know to whose order they are held. But ... if you were to conclude ... that in practice Mr Allen used any monies or assets belonging to any of the various companies as if they were his own then ... that would be an indication that the various trusts do not set out the true position. An owner of things is the person generally who has the say so about what happens to them. You are entitled to say whether you keep your motor car or you sell it for instance. Take one absolutely particular example and if you concluded that Mr Allen actually did whatever he liked with any of the assets or monies of any of these companies that would be powerful evidence that these documents, lengthy as they are, are ... simply pieces of paper.' This passage is criticised by Mr Newman, first, on the footing that the judge has categorised as unusual -- and therefore impliedly suspicious -- aspects of the trust deeds which are in fact perfectly normal and unexceptionable, or which, at least, cannot throw light on the question whether they were 'sham' documents. Thus, the power to nominate a wide (even unlimited) class of beneficiaries is nothing unusual, and the fact that the assets included bearer shares is simply neutral: it cannot cast light on the issue as to 'sham'. Moreover it is argued that since the trustees were entitled to prefer any beneficiary over any other, the fact that a particular individual, Allen, enjoys all the use of the trust property as if it were his own is entirely consistent with the existence of a trust. We take the view, and apprehend that the Crown was inclined to accept, that those features relating to the width of the discretionary trusts and the existence of bearer shares among the assets were not indicative of anything sinister at all in the documents; and so far as the judge suggested otherwise, he should not have done so. But this criticism of the summing-up has to be viewed in context. The plain fact is that if the jury found that Allen was the beneficial owner of the assets in question, they must inevitably have convicted him on count 11. They were fairly and squarely directed to that effect. And there was, in fact, overwhelming evidence that the assets were Allen's to dispose of as he would, that he treated them as such, and that there was no question of the trustees possessing any real power or discretion in the matter. The evidence in question is summarised in the Crown's skeleton, and since it is not disputed by Mr Newman we need not set it out. In our view it is impossible to conclude that the jury may have been misled by the judge's mistaken emphases. Mr Newman advanced a further argument, conspicuous for its imaginative quality. He submitted that if he was wrong upon the issue of 'sham', then the corporation tax counts and the income tax counts against Allen -- that is, the rest of the indictment -- were fatally infected: it would mean that all the assets of the companies belonged to Allen, so that there would be nothing on which to charge corporation tax; and Allen could not be liable to income tax on benefits in kind, since they would, in effect, be gifts to himself. He referred to s 8(2) of the 1988 Act: 'A company ... shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity'. But, as Mr Rook submitted, the fact that Allen owned the companies did not imply that they generated no profits. A company's profits are not earned 'in ... a representative capacity' on behalf of its shareholders; nothing could be more elementary. Allen, as beneficial owner of the companies, was entitled to a distribution of profits, which is what he got. All these convictions are perfectly safe, and the appeals are dismissed. DISPOSITION: Order accordingly. SOLICITORS: Saunders & Co; Registrat of Criminal Appeals; Solicitor of Inland Revenue.