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Archive - Friday, 21 October 2005
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Tax cheat Reynolds told: Prepare for jail
FORMER Darlington Football Club chairman George Reynolds is facing jail today after he pleaded guilty to being a tax cheat.
The 69-year-old businessman and his cousin, Richard Tennick, were warned that a prison sentence was a serious possibility after they admitted a £650,000 tax fraud.
Reynolds denied other charges of money laundering, evasion and attempted evasion of liability by deception, and conspiracy to defraud.
Tennick denied money laundering and conspiracy to launder money.
Newcastle Crown Court heard the pair, both former directors of the football club, failed to declare their earnings to the tax man between April 1998 and June last year.
They also did not tell the Inland Revenue they had received dividends of £1.6m each after the sale of part of George Reynolds UK Limited (GRUK), in 1998.
Reynolds, at one time one of Britain's wealthiest men, submitted tax returns over six years claiming he did not earn an income.
In 2002, he even declared the only money he received was his old age pension - a sum of £4,697, of which he owed £14 in tax.
In fact, he led a lavish lifestyle.
The court heard he splashed out on:
* A luxury yacht in Spain
* His mansion in Witton-le-Wear, County Durham
* Two Rolls Royces with personalised number plates
* A house next door to the Spice Girls in Hampstead, London
* Three top-of-the-range Mercedes cars
* A Beetle
* A Range Rover.
* Shares in Darlington Football Club
Christopher Knox QC said Reynolds also paid himself large amounts of cash including, in one case, £20,000.
Mr Knox said: "He simply used the company as his own bank account. He was to tell police he did not have a bank account of his own. He used company money as his own.
"The scale of benefits in Reynolds' case is really quite remarkable."
The court was told Reynolds and Tennick treated obligations to pay tax on their earnings with "cavalier contempt".
But while they told the Inland Revenue their income was nil, Reynolds was being paid £10,000 a month from GRUK, an annual salary of £120,000.
He also made millions when he sold a substantial part of Direct Workshops Limited in 1998, the company he had built up from nothing.
The court heard Reynolds was at the centre of the case but Tennick was extremely close to the former football chairman and went along with the decisions Reynolds made.
Tennick also failed to pay tax, despite being paid £35,000 a year.
The tax fraud came to light when Reynolds was stopped by Durham Police in June last year, in High Etherley, near Bishop Auckland, and found with £500,000 in the boot of a car.
Mr Knox said the club chairman had earlier in the day visited the Co-op bank in Shildon, County Durham, and withdrawn the money in cash.
This aroused suspicion with the bank and he was stopped by police, along with Tennick and Ian Robinson, Reynolds' assistant and a director of the football club.
Reynolds withdrew the money after he was paid £1m in May last year after Darlington Football Club went into administration and was subsequently taken over by the Sterling Consortium.
Judge Guy Whitburn was told Reynolds had ploughed £27m of his own money into the club and Tennick had given £1.3m from his personal funds.
Mr Knox said of Reynolds: "He was unhappy and deeply insecure and feeling he had been robbed. He was very concerned he did not want to lose the rest of his money.
"He drew half a million pounds in cash from the bank and he was stopped by police.
"As a result of that, inquiries were commenced."
David Robson QC, for Reynolds, said it should have been obvious to anyone, including the Inland Revenue, that his client was earning far more than a pension.
He said: "We are to some extent operating in the world of the unreal.
"Mr Reynolds, at the time concerned, was not only locally but nationally very well-known.
"He was in the Sunday Times Rich List of the top 200 people in the land and he was known to be a vastly wealthy man, nowhere better than in the North-East, where the extent of his business was known.
"If it is seriously to be suggested that he put in a tax return, in which he expected anybody to believe his sole income was an old age pension of £4,500, then he could only have done so on the basis the person who dealt with it at the Inland Revenue lived in a rabbit hole and only came out to go to the office."
Reynolds, of Monument Court, Durham City, and Tennick, 59, of Bowling Green Lane, Manfield, near Darlington, pleaded guilty to cheating the public revenue.
The other offences were ordered to lie on file.
Judge Whitburn warned Reynolds: "These offences are cheating the public revenue. I regard them as extremely serious. It's likely only a custodial sentence would be appropriate."
No evidence was offered by the prosecution against Mr Robinson, of Shildon, County Durham, who denied all charges.
Both Reynolds and Tennick were given bail and are expected to be sentenced today.
A spokesman for Darlington FC said last night: "The club is under entirely new ownership and has made a break from the past."