A multimillionaire tax accountant – who signed everything he had over to his wife to dodge paying debts – could now lose his “chocolate box” country home after a £600,000-plus defeat in court.
Tax specialist John Dixon, formerly a £2m-a-year partner at top accountancy firm Ernst & Young, enjoyed a stellar career, during which he was invited to Downing Street and appeared at Parliamentary committees.
But after running up a huge personal debt with the taxman, he was made bankrupt in 2017, owing more than £600,000 in unpaid tax, penalties and interest.
However, when bankruptcy trustees tried to get his cash, they learned that years earlier he had signed documents handing everything he had – or would ever have – to his wife, Janet, in a bid to avoid any future debts.
A judge subsequently set aside the documents, having found that the trusts, established prior to his tax bill, were intended to “defraud” any future creditors by putting his assets beyond their reach.
Having previously lived a multimillionaire lifestyle with expensive cars, an apartment in Barbados and a lochside mansion in Scotland, Mr Dixon, 70, says he and his wife are now reduced to living on their state pensions after the couple were hit with a freezing order.
The pair now face losing their home – a Grade-II listed three-bed thatched cottage in the Welsh Borders – after the trustees launched a bid to seize and sell it.
In a hearing at the High Court last week, at which a judge upheld the findings about his assets, Mr Dixon said he felt he had been “mugged” by an “unfair” court process, with the threat of being kicked out of his home now hanging over him.
The high-flying accountant was formerly a partner at Thornton Baker, which later became Grant Thornton, before joining Ernst & Young as a partner in 1997. He was later appointed managing partner and UK head of tax for the financial giant.
In her ruling on the dispute last year, Judge Sally Barber said Mr Dixon had in 2010 executed a series of declarations of trust in favour of his wife.
The declarations “purported to divest himself of all present and future assets in favour of his wife,” handing her ownership of valuable properties and cars, and all of his future income – leaving him completely dependant on her for money.
Among the properties were Pennymore House, in the village of Furnace in Argyll, Scotland, which was later sold, with the £126,000 proceeds going to his wife.
The couple’s eight-bedroom period property with a swimming pool, known as The Stonehouse, in Woolhope, Herefordshire, was also declared hers, before being sold for £1.2m at a loss.
They later moved to Toad Hall, his three-bed thatched cottage in picturesque Eardisland village, near Leominster, Herefordshire, now thought to be worth about £730,000.
Having signed the documents, Mr Dixon remained as managing partner and UK head of tax at E&Y for the next four years, earning £2m-a-year, while Mrs Dixon was a “housewife” alongside managing her fabrics business.
In 2015, HMRC served a demand on him for £627,302 in September 2015, which he responded to by claiming his assets were “nil,” the declarations of trust having beneficially transferred “all his assets and future income” to his wife.
However, he was made bankrupt over the unpaid debt in 2017. He was only discharged from his bankruptcy this year.
At the High Court last year, the trustees in his bankruptcy, Emma Sayers and Jeremy Willmont, argued that 2010 trust declarations were attempts to place his assets beyond the reach of future creditors.
Mr Dixon defended the claim himself, arguing that he had no such intention and that he did what he did as part of inheritance tax planning and due to economic fears amid the credit crunch.
Giving judgment, Judge Barber said she was satisfied he had entered into the declarations for “no consideration” and for the “purpose of putting assets beyond the reach of a person who may at some time make a claim against him or of otherwise prejudicing the interests of a person in relation to the claim which he may make.”
She ordered that the declarations be set aside, opening the way for the trustees to pursue his assets in order to pay off his debts.
Last week, Mr Dixon returned to court, where he argued that he should be given permission to appeal the judge’s order on the basis that what happened was “unfair.”
Representing himself before Mr Justice Richards, he said the case was “of critical importance” to him and his wife, adding: “We are facing an application by the claimants for possession and sale of our home. It’s not a happy situation to be in.”
He said that because the couple’s assets are currently frozen, they have been limited to their state pensions and so could not get legal representation.
Complaining at having had to argue his own case against a team of top lawyers last year, he said: “We basically were sort of mugged over three days. I find it very difficult to manage that sort of situation.”
Mr Dixon put forward a range of procedural grounds of appeal and challenged the judge’s factual finding that his purpose in signing the trusts was to put his assets beyond the reach of any future creditors.
Pointing out the fact that, at the time the trusts were established, there was no debt to the taxman, he said there was “no evidence” of “any intention to transfer assets away from creditors.”
“Do you really think that I would jeopardise a career of so many years – I was in Number 10 Downing Street 20 times – over just over £500,000 worth of penalties and interest when I was earning £2m a year?” he said.
“It’s inconceivable that I would have done that. The reality is – now and for many many years – that I have been totally reliant on Janet for financial support.”
Giving judgment on his application for permission to appeal, Mr Justice Richards said Judge Barber had found as a fact that the declarations of trusts were intended as a way of “defrauding creditors.”
“There were matters for the judge to weigh in the balance,” he said.
“The fact he considers a different conclusion was available doesn’t approach the threshold for a realistic challenge to findings of fact.”
Although acknowledging that the case is an “important matter” for Mr Dixon, he concluded: “I have reached the very clear conclusion that there isn’t an appeal here with sufficiently realistic prospects of success.”
The appeal bid was refused, with the trustees’ application for possession and sale of the couple’s home set to go ahead at a later date.
