Concealment (3 page)

‘
What a worthless, shallow bitch,’
said the little voice, leaving me unsure if she meant Isabelle or me.

Isabelle sensed me peering at her, and flushed almost imperceptibly.

‘You wanted to know about the potential lawsuit on JJ?’

‘Yes please.’

‘OK—a few years ago, JJ carried out a reorganisation, and all the business divisions were moved into one company. They have a slate quarry and mine, which had always been unprofitable, and the tax losses brought forward were transferred to the new trading entity.’

‘Yes,’ I said. ‘Go on.’

‘JJ first claimed the losses two years ago, when the slate division turned the corner. Then the Inspector of Taxes raised an enquiry. He thought profits might be overstated.’

While it’s unusual for HMRC to suggest that the declared income of a business is excessive, they may do if they suspect manipulation to maximise loss relief.

‘Don’t tell me—queries on the allocation of divisional overheads?’

‘How did you guess?’

‘Been around a bit, kid—seen it before. Be all too easy for JJ to move expenses from the slate division to another part where there’s no losses available.’

‘He also thought there were bad debts which they should have provided against.’

‘And what’s your view?’

‘The apportionment of overhead expenses is always subjective,’ she said with her customary diplomacy, ‘but there were some robust counter arguments we could have deployed. And the questions on the bad debt provision were plain silly, in my opinion.’

‘You said arguments
could
have been deployed?’

‘We never got the chance, because Charles Goodchild identified a mistake we’d made in our advice so that the losses weren’t actually available.’

Goodchild was JJ’s finance director, who I’d also be meeting in the morning.

‘What mistake?’

She proceeded to describe a highly technical tax pitfall of group reorganisations—one I’d faced many times before. We usually found a work-around if the issue was identified upfront, and it would have been shocking negligence if we’d failed to spot it. Our clients paid us to recognise and sort out these conundrums.

‘I can’t believe we missed it. We’ll mount a vigorous defence…’

But both Lisa and Isabelle were shaking their heads.

‘You needn’t bother,’ said Isabelle.

‘Why on earth not?’

‘Because Jim Jupp and Eric Bailey are such good friends, JJ’s agreed not to sue,’ she explained.

I must say this didn’t ring true, but I let it go.

‘So in other words, the matter is now resolved,’ I said, breathing a little easier.

‘Egg-zackly,’ she said. ‘But Goodchild will be expecting to see a letter to HMRC, explaining why we’re dropping the loss claim. I’ve drafted it up, if you’d like to review it before tomorrow.’

‘Thanks—I will—that’s all, Isabelle.’

Isabelle shimmied off, graceful and self-confident, leaving a discreet fragrance behind her.

Of course, she might not have been quite so poised if she’d known she only had four days to live.

***

‘Convincing little liar, isn’t she?’ remarked Lisa after Isabelle had gone. ‘I predict a glittering career ahead for her.’

‘How do you mean?’

‘Because Jim Jupp and Eric Bailey are such good friends, JJ’s agreed not to sue,’ she said mimicking Isabelle’s voice.

‘I agree—it doesn’t sound at all in character. JJ’s not a man to put friendship above business. Bailey must have offered him some inducement.’

‘What about the Pearson Malone Entrepreneur of the Year Award—Jupp
is
on the shortlist?’

‘Could be. But to sacrifice several millions of tax losses for a poxy trophy—even for an egomaniac like Jupp…?’

‘Agreed. It only makes sense if for some reason the losses
are
unavailable.’

‘Oh I get it,’ I said, the light beginning to dawn. ‘The
client
screwed up the implementation.’

It was by no means unusual for clients to attempt to blame us for their own shortcomings. Jupp had merely gone one step further by twisting the truth to wheedle a concession out of his old chum Bailey.

‘And you reckon Isabelle knows the client messed up?’ I asked Lisa.

‘I’m
certain
she does. She checks the files, she’s little Miss Perfect.’

‘So why’s she lying?’

‘Search me. I believe she raised the issue with Venner when I was on holiday but he told her to back off.’

‘Should I speak to Venner?’

I was reluctant to do so—he hadn’t even bothered to say goodbye properly, hadn’t given me the chance to tell him I didn’t believe a word of the allegations against him. Which made me wonder…

‘You won’t be able to reach him. He’s gone on a month-long cruise before taking up his new job and he’s uncontactable.’

Or rather he didn’t want to be contacted.

‘Mind you,’ I said, ‘you’ve not made much effort to set the record straight either.’

‘Nobody’s suggested I lie about it,’ she retorted, a shade defensively.

‘I should think not, because you never lie, do you?’

She knew as well as I did that there was often little moral distinction between a lie and remaining silent.

‘No, but equally I’m not on a kamikaze mission—if I’m leaving I need a reference.’

It wasn’t even much of a justification for keeping quiet. Everyone who left received the standard reference, except for the crazy guy who’d lasted a week before he glassed someone in the pub on the Friday night.

‘Oh come on,’ she said, sensing my disapproval. ‘If I drop Goodchild in it, Smithies’ll be out for revenge big time.’

‘Why would he be bothered?’

‘Ah,’ she said. ‘You haven’t been told, have you? Goodchild’s married to Smithies’ sister.’

Dozens of demonstrators barred the entrance to JJ’s headquarters as I arrived.

‘
Stop Capitalist Pigs Now
,’ read one of their placards. ‘
The 1% are killing the rest of us
,’ proclaimed another. And, in a more direct jibe, ‘
Pay Up Jim Jupp
.’

The protestors hadn’t targeted JJ’s offices at random. JJ’s wife, an Isle of Man resident for tax purposes, held all the family’s shares in the company—she would pocket nearly five hundred million tax-free when the Megabuilders deal went through. No matter that this brand of tax planning was within the law—the media had been relentless in their condemnation and had whipped up a tidal wave of public hysteria. Now everyone was baying for Jim Jupp’s blood.

As I elbowed my way past the demonstrators, they stared at my navy blue Armani suit and peach silk blouse with grave mistrust, but let me pass unimpeded. Maybe they saw through the costume to the weirdo underneath.

The JJ building showcased the work of their office construction and fit-out division. Behind the elegant Art Deco façade, it had been gutted and subjected to a hi-tech remodelling. An imposing marble reception area with ornamental fishpond led to a glass-roofed three-storey atrium. In the centre, a lavish space-age chandelier hung, apparently suspended in thin air, while glass elevators with flashing coloured lights whizzed up and down at terrifying speed.

Jupp’s office suite occupied the whole of the top floor. In sharp contrast to the rest of the building it was traditionally furnished with leather sofas, antique tables, plush carpets, and works of art which didn’t look like reproductions. And that was just the waiting room.

The sound of raised voices from behind the closed door of Jupp’s office broke the illusion of tranquillity. I couldn’t hear everything but I caught snatches of the words.

‘Take my money… I’ll honour my part of the bargain… won’t answer for the consequences… wouldn’t have the balls… nothing more to be said...’

At which point the door opened and a red-faced man in his mid-twenties burst out.

‘Fucking parents,’ he muttered, shaking his head.

Five minutes later Jupp’s secretary escorted me into the room. Jupp stood up, took my hand in a vice-like grip and pumped my arm up and down as though trying to dislocate it. He beckoned me to sit at an oversized walnut veneered board table.

‘Good of you to meet me so quickly. I’m sure you’re a busy woman.’

The strength of his Geordie accent startled me. I knew he’d attended the same grammar school as Eric Bailey, but our CEO’s speech carried only the faintest hint of a northern dialect. Sod diversity—Bailey must have spent a fortune on elocution lessons to eliminate every trace of his origins.

‘No problem,’ I replied.

‘Any hassle with those losers outside?’ he asked.

‘None.’

‘They call themselves anti-capitalists, but I’ll bet if you gave them ten grand each they’d all piss off. Everyone has their price.’

He plainly regarded ten thousand pounds as a trivial sum. Did he have any inkling of what life was like for ordinary people, or their outrage at the way obscenely rich people like him slithered past the taxman?

‘Ten grand might be over-generous,’ I suggested.

‘I don’t see why they’re so fussed anyway. If the money went to the government they’d only piss it up the wall paying middle managers in the NHS. My wife owns the shares and she lives overseas so there’s no tax due when we sell the company. It’s not rocket science, it’s not illegal and it’s certainly not immoral. It’s just the way things are.’

In fact, Mary’s emigration and tax residency status had been the result of extensive advice from the Pearson Malone private client team. But Jupp was correct in one respect—until such time as the law caught up with the shifting moral climate, what they’d done was perfectly legal.

‘Her tax position is watertight,’ I said. ‘Provided she’s followed our advice, that is.’

This was the nub of the matter. It was almost inevitable she’d have accidentally breached the complex conditions for offshore residence in the past ten years, and she’d be easy prey for an HMRC enquiry. After all, taxmen read the newspapers too. But I would gain nothing by voicing this prediction.

‘And JJ Resources pays corporate tax too, not like some of these global firms who ship all their profits offshore.’

The arrival of Charles Goodchild, JJ’s Finance Director, saved me from any potentially hypocritical agreement to this statement. His bloated appearance reminded me of Smithies, and on this basis alone I was minded to distrust him. And though his suit was more likely Austin Reed than Savile Row, he was equally supercilious.

On paper at least, he would be comfortably wealthy post sale. All his share options would vest and although some of his proceeds would swap over into Megabuilders’ equity, he would get a reasonable dollop of cash on Day 1. With no easy way for him to avoid tax, he’d nevertheless be left with assets worth upwards of two million—vastly more than such mediocrity deserved. Still, he wasn’t the first person to strike lucky on a takeover and he wouldn’t be the last.

Goodchild removed his watch and laid it out in front of him, as though to emphasise how little time he could spare out of his busy day.

‘Let’s cut to the chase,’ he said, before Jim’s secretary had even finished pouring the coffee.

‘Yes, please do. I can see you’re in a hurry.’

‘I imagine you’ve heard about the pig’s ear your predecessor made of the reorganisation project.’

I smirked inwardly, recognising the blustering of someone who’d blundered but avoided detection. Somehow, I doubted whether even JJ knew the truth.

‘Yes, I’m told the claim for the slate division tax losses will have to be withdrawn.’

‘Indeed, and you were supposed to be drafting a letter,’ he replied, with disproportionate aggression.

‘I have it here.’

The letter, carefully worded by Isabelle, was a masterpiece of diplomacy. However much I loathed the girl, I had to grudgingly admit she was damned clever. We hoped that HMRC would now accept our explanations and withdraw all his enquiries. After all, he couldn’t reasonably continue to argue that profits were overstated if they were taxable.

‘This is well written,’ said Goodchild, sounding surprised. ‘But we have a new challenge. Now Megabuilders want to reduce the price for the company because the losses aren’t available.’

‘It’s a try-on,’ I said, making light of this apparently empty threat. ‘Hardly anyone ever pays for tax losses upfront—there’s too much anti-avoidance legislation to stop them being used.’

‘No—you don’t understand. They expect a price adjustment because of the extra tax due for the years already submitted.’

I cursed myself for not having foreseen this.

‘And it’s up to you,’ chimed in Jupp, ‘to find another way to save us tax and put the position back to what it was before.’

So not enough for us to take the rap for Goodchild’s oversight—they expected us to rectify it to boot.

‘Well,’ said Goodchild, sensing my uncertainty and taking obvious pleasure in cranking up the pressure. ‘Any ideas?’

I sipped at my tea, shamed by my inability to provide the instant solution they expected and desperate to buy a crucial few seconds’ thinking time. The ticking of the antique carriage clock and Goodchild drumming his fingers on the table only added to my stress.

‘Capital allowances,’ I said, in a flash of brilliance driven by necessity.

Yes—they must surely have spent millions on capital expenditure on quarrying and mining equipment. The chances were no one had examined the tax allowances in detail with so many losses swilling around. And the claim could be backdated, which would nicely cover the affected years.

‘My thoughts egg-zackly,’ said Goodchild, sounding spookily similar to his brother-in-law, as he attempted to take credit for my idea. ‘So we’d like a full review and agreement with HMRC, free of charge please.’

‘I can’t do it for free, but why don’t we get one of our capital allowance specialists to do a site visit and an initial evaluation? Then we can see how much the potential tax savings might be before we do our quote.’

Goodchild opened his mouth to argue, but Jupp sprung swiftly to my defence, perhaps because he didn’t care to jeopardise whatever deal he’d struck with Bailey.

‘Sounds fair enough. But is a site visit really necessary?’