Episode 15 Saints and Scroungers

We live in a country where the taxes we pay go to provide essential services that we rely on every day.

It's also there to give us a safety net in case life takes an unexpected turn.

This vital money supports people in a time of need.

The poor chap was anxious and agitated.

But there will always be some people who see that money as something they deserve, even when they don't.

This revealed that she had fraudulently claimed benefit in the region of £75,000.

Welcome to the world of Saints And Scroungers.

Saints And Scroungers shines a light on those worthy welfare claimants

and casts a shadow on the cheats trying to beat the system.

On the one hand, investigators all across the UK are chasing fraudsters who steal from the public purse.

On the other hand, there are the saints, fighting to ensure

people get the help they are genuinely entitled to.

Coming up on today's show...

the intriguing tale of the IT tax dodger.

We didn't expect him to walk in with a cheque for £500,000.

And the mother who sacrificed everything for family, house and home.

I thought I really do need help.

Taxes, love them or loathe them,

it's the money that we pay in to make sure that society keeps ticking over. It's just the way it works.

But then there are some people who see that money as theirs when it isn't.

Meet Stephen Maxwell.

Back in 2007, he was not only earning top dollar as an IT consultant,

but he was also hailed a hero after he helped rescue people from a train crash in Cumbria.

The stress he suffered following the rail accident

left him unable to continue his work

and he ended up filing a claim for compensation.

However, when National Rail contacted HM Revenue & Customs to verify Maxwell's earnings,

alarm bells started to ring.

It looked like Maxwell didn't exist on HMRC tax records.

But was this a tax-dodging apparition or was there a very simple explanation?

I've come down to meet Clare Merrills, HMRC spokesperson,

to talk about the all-too-real problem

of people not paying their tax.

How much is lost to tax fraud every year?

We're looking at £4 billion a year through people actually evading paying their taxes.

What's the impact on the country for the rest of us when people don't pay their taxes?

If everybody paid what they were due to pay, then we would be in a very, very different situation.

But if you think about it, if you're paying your taxes,

the person next door is bragging in the pub about not paying theirs,

a few years ago, that would actually almost have been, "Well done," it's quite acceptable.

Times are changing now.

The country is in a position where it needs all the money that it can get to fund all sorts of things we need,

mending the roads, paying hospitals, that's where our money goes.

No longer is there this acceptance that that's a really good, old boy thing to do, not paying your taxes,

because we all now feel, "I pay mine. Why aren't you paying yours?"

That's exactly the question that tax investigators were asking.

Now, it seemed that Maxwell had been earning a fortune working as an IT consultant before the crash.

Not according to tax records, unless, of course, he was giving the taxman the slip.

Maxwell's name was passed to investigator Paul Rooney

who was already interested in the same person.

Back in 1999, Stephen Maxwell was an IT consultant.

He lived in Bexley in Kent with his wife and family

and he was very good at his job as an IT consultant

and worked within the London City banks.

Maxwell was a director of his own limited company, in other words, a one-man band.

The contracts he had with the banks were with the limited companies who would pay him.

During the 1990s, Stephen Maxwell had several limited companies that had folded

with debts owing to Inland Revenue.

This was known as "phoenixism"

where the company carries a liability to an amount of tax that it owes to the department,

and rather than pay those liabilities, the company would just fold and liquidate,

and the director becomes a director of a new company,

and that sets up as if nothing's happened.

OK, so the indications were that Maxwell was engaged in what's called "phoenixing" -

creating companies, then folding them before paying outstanding tax that was owed.

And after closing one company, Maxwell would then start another,

and this quickly made the taxman suspicious.

Investigators asked Maxwell in to tell his side of the story.

The trouble is, he didn't turn up at first.

Without any co-operation from Mr Maxwell, we had little alternative

but to raise estimated assessments, based on what we thought he earned during that period,

and those assessments were issued accordingly in a sum getting on for £500,000.

Let's check we heard that correctly.

..getting on for £500,000.

Yes, that's a hefty sum.

But still the Revenue were more than happy to negotiate.

Realistically, we didn't expect him to walk in with a cheque for £500,000.

If somebody couldn't pay all the money up front,

we would arrange for them to make a payment over a period of time, based on what they could afford.

He did get in touch and agreed to attend a meeting,

but at that meeting, he told us that his IT skills were out of date and he was struggling to get work.

That wasn't perhaps unreasonable. The industry was very fast-moving in the late '90s, early 2000s.

And that might have been the case.

We examined the bank accounts he was operating.

No income was coming into the bank accounts, so we accepted that explanation.

A change in circumstances meant Maxwell couldn't afford to pay back what he owed.

It all sounded pretty plausible.

We wanted to reach a negotiated settlement

by which he could pay the amount that he owed over a period of time,

but if that couldn't be reached, he would have to be made bankrupt.

Following that meeting, he didn't co-operate with us any more,

he didn't turn up to any meetings or answer any correspondence.

We had no alternative but to begin bankruptcy proceedings

which would mean we could pursue his personal assets,

and in 2002, Stephen Maxwell was made bankrupt by Inland Revenue.

In an attempt to recoup some of the money lost, investigators looked at selling Maxwell's property.

The problem was it was mortgaged to the hilt and there was no value left in it.

The tax remained unpaid,

and eventually, Maxwell just kind of slipped off the radar.

So when we left Stephen Maxwell, he was bankrupt.

His skills were obsolete. He couldn't carry on in the job he was pursuing.

And that kind of seemed like a pretty miserable end for him.

When does he crop up on the radar again?

We were carrying out an investigation on another company,

and this was probably three years later, 2005.

While we were going through their records, we came across this name.

One of the investigators thought, "That's a familiar name. Could it be the same person?"

When we started looking, it turned out that, remarkably, it was him,

and he turned up again working for somebody else.

-So he was working?

-He was working.

He had set up an offshore bank account to have his wages paid into, in effect,

to try to keep out of our radar,

but he did turn up again.

-What kind of work was he pursuing?

-He was doing IT work again.

So he was still an IT consultant, even though his skills were supposed to be obsolete.

As a bankrupt, though, are you supposed to tell somebody when you're working?

When you're a bankrupt, you're not in a position to set up your own companies and be a director.

But he had set up this company. He hadn't got himself listed on any of the records for it.

But all the money was then being pushed offshore,

so he was playing around with the system to avoid us.

And the deeper the investigators delved, the murkier it got.

The case was passed along to me as a potential criminal investigation.

He was living in a house in Scotland that was in the name of an Isle of Man company.

Money that had been paid in respect of work that he had done had been paid

into bank accounts in the name of offshore companies

in the Isle of Man and in Cyprus as well.

And it was also apparent that he hadn't made any tax returns during that period,

so on the surface, it appeared that he was concealing his assets and his income from HMRC.

Maxwell's tax bill was suspected to be a six-figure sum, but he was no fool.

Would they be able to uncover the evidence to put the case to bed?

What I was trying to prove was that Maxwell had defrauded HMRC.

For now, it's farewell to the fraudsters and hello to the people we call our saints,

those in society that help others in genuine need,

but who are too proud or don't even know how to claim what is rightfully theirs.

Wouldn't it be wonderful if our troubles came along one at a time,

so we could pick them off individually and deal with them?

Life doesn't work like that, unfortunately.

When problems come in quick succession, it is very difficult to cope,

not just financially but emotionally too.

Meet Helen Fisher.

In 1998, life was ticking along nicely - a successful teaching career, a young daughter

and a husband, Ken, who worked in the motor industry.

When I met Ken, it sounds corny, but it was love at first sight.

We decided we wanted to be together. We just had a really lovely time.

We found out I was expecting Jemma, which was really lovely.

But life as they knew it was soon cut short.

Ken fell ill, and after a period of steady decline, worse was to come.

In March 2010, he passed away.

And it wasn't long before Helen was staring down serious financial problems.

They were stacking up fast.

Because the child benefit was in his name, that stopped.

His DLA stopped, his pension credits stopped, so that meant the interest on the mortgage stopped.

The council tax benefit stopped.

Literally, everything stopped.

The heartbreak was made all the more difficult

by the fact that the family had only just got back on track after years of tragedy and hardship.

Life first started to unravel for the family back in 1998.

Helen and Ken had taken two-year-old Jemma for a holiday to Portugal

when Ken suffered a heart attack.

Three out of the four arteries were blocked.

It ended up being a quadruple heart bypass.

Ken made a good recovery and opted for voluntary redundancy,

which allowed them to move into a house that was better suited to his needs.

That's when conditions started to deteriorate.

One day, he rang me and he couldn't remember how to get in the house.

Doctors diagnosed him with cardiovascular disease, which led to dementia.

As things went from bad to worse, it was clear that life for Helen was never going to be the same again.

Helen is the type to...

Like I said, she doesn't want to appear as a failure.

And Helen was trying to be everything for everybody.

She wasn't asking for help. She was trying to manage.

She thought it was down to her to be the one to sort everything out.

For several years, Helen juggled Ken's care, her work and being a mum,

but eventually, it became too much to cope with.

Things came to a head. I was in Tesco's shopping and I literally collapsed.

I didn't understand what was wrong with my mum,

so I never knew she was suffering from depression

and having a nervous breakdown.

I just knew she was ill, but I knew it was because of my dad and the stress of looking after him.

Juggling her care responsibilities made it impossible,

so she quit work and applied for a £50-a-week carer's allowance.

So I had gone from earning £35,000 a year

to earning £2,000,

so it's not rocket science that we weren't going to be able to pay the bills.

The family were in a very difficult situation, but Helen then started to get advice.

So I went on the internet and I typed in "benevolent funds".

The website for Turn 2 Us came up and it said it had got a helpline number.

So I rang them up and explained.

She said she would send us out some leaflets for charitable organisations

that may possibly be able to help.

Turn 2 Us is a gateway organisation that helps find out

what benefits people in difficulty could be eligible for.

We've got experienced and skilled advisers who will go through the benefit check with an individual,

identify what they're entitled to.

They'll search the database of grant-giving organisations

to find a grant which will meet their particular needs and circumstances.

Because Ken had worked in the car industry, Helen set out to see if she could get support

from a benevolent fund specifically established to help people in the motor trade.

My initial instinct was this lady needs as much help as we can give

in an emotional, physical and financial sense.

It was just the kind of help that Helen had been desperately looking for.

The benevolent fund even gave Helen some much-needed respite.

BEN have a residential home in Southport and they had two rooms available for a short period.

And she thought it would be nice if Ken would like to go there

to give me some respite, so that I could have a little holiday with Jemma,

so Ken went to stay there for a fortnight, and Jemma and I had a break.

It was lovely to spend time with my mum, just my mum, because it was always the three of us,

but it was also sad to miss my dad.

My mum got to have freedom, so it was really nice to get away.

Helen was really getting things back on track.

She was getting proper help with her bills and proper support with housing advice,

but just as things were looking up, they came tumbling down again

as Ken passed away.

All her finances stopped, and she had absolutely nothing,

because when a spouse dies, you have to sort it all out.

This time, Helen knew where to go - Turn 2 Us, whose advice had helped her family so much in the past.

8'When Helen got in touch with us the second time, we were sad to hear that Ken had died

'and potentially her house was going to be repossessed.'

We looked using the Turn 2 Us grants database to see what other charitable support we could provide

for Helen in this really difficult situation.

The organisation pointed Helen in the direction of a charity that's been providing teachers

with counselling and advice since 1877.

They suggested that I contacted the Teachers Support Network, because I was a former teacher.

They came back to say that I would be able to access my teacher's pension.

I took the lump sum to pay off the arrears. As a gesture, they sent me a cheque for £250.

Goodwill gestures like this offered essential piece of mind.

Once again, Helen was motivated to find further assistance,

especially now that she knew how to ask.

The Job Centre helped me fill in the form for the Bereavement Allowance.

That helped with the funeral costs.

And then the Benefits Maximisation team came back,

and he said, "You're entitled to a Widowed Parents Allowance,

"because your husband's paid 32 years of National Insurance."

So I get a Widowed Parents Allowance while Jemma's in full-time education.

Now Helen's putting her hard-won experience to good use, helping others at difficult times.

After all the trouble that I'd had, trying to work my way through the benefits system,

care entitlements, somebody suggested to me that perhaps I might like to go and volunteer

for the Citizens Advice Bureau.

I got involved doing the general advice training.

It's so rewarding that I'm helping people.

And if I can stop even ten people becoming so depressed like I was,

then, you know, I think I've done a good job.

Now she's helping other people, and you can tell she's so much happier.

Because I've been there, seen it, worn the T-shirt,

I can support people better, because I understand where they come from.

SHE LAUGHS

But now let's leave out saints and return to the devious world of the scrounger.

In 2002, HMRC had bankrupted Stephen Maxwell

for not paying his tax bills,

but ten years later, he was back in their sights.

To some, Stephen Maxwell was a hero who'd rescued passengers from a train crash in Cumbria.

But to tax investigators, he was now suspected

of getting up to his old tax-avoiding tricks,

this time putting undeclared money in offshore accounts,

all while HMRC still thought he was unemployed and bankrupt.

Tax fraud investigator Paul Rooney was given the task of picking through the evidence.

Once the investigation began, it was also a case of being sure he wasn't paying tax.

That was quickly established.

Paul examined the paper trail and saw Maxwell had worked as an IT consultant

for several prestigious banks.

I went to see the banks Maxwell had apparently worked with.

They supplied details of how much they'd paid for the work he'd done.

Paul found that Maxwell had had his wages paid into two offshore company accounts,

one registered in Gibraltar with bank accounts in Cyprus and another set up in the Isle of Man.

The first thing to do was to carry out checks on those companies, and it quickly became apparent

that Maxwell was neither a director nor a shareholder of either company.

This was strange. If Maxwell wasn't a director,

why was he having his wages paid to them? The investigators dug deeper.

When we got the documentation back from the offshore bank accounts,

one account was in respect of the mortgage that was held on the property he lived in.

Other documentation showed that his signature was on documents and cheque stubs

and also much of the expenditure that we identified in the account related to the house

and also predominantly was going on in the area where he lived.

Yes, so where was he living? He's supposedly bankrupt, so it's not going to be anywhere fancy.

-Is it?

-It appeared that he was living in a very large country house in Scotland.

He was driving a Porsche. Indications were that he was living with his wife,

and we appeared to establish that he was still earning very high amounts.

When we looked at Stephen Maxwell's current situation, he did have a UK bank account

that was held locally in Castle Douglas, but there was little or nothing going into it

and he had no assets or income.

So he was living the high life, but his UK bank account was empty.

Again, highly suspicious.

By now, the offshore companies were giving up their secrets.

It was discovered the first account was set up in 1999.

That was when Maxwell claimed he couldn't pay his tax, because work was drying up.

In fact, at the time, up to £20,000 a week was being diverted into the account.

When I examined the bank statements, I established that during the period 1999-2008,

he'd earned almost £2 million in that period and tax due was something in the region of £675,000.

Remember, we're talking here about someone who, according to the taxman, was not only unemployed

but bankrupt too.

What kind of lifestyle was being paid for with this money?

-With £2 million, he had a lovely lifestyle.

-But none of that was really his. It was the company.

-Yeah. And he wasn't paying any tax on it.

-OK.

So he's come back into your sights. How do you proceed with that?

We then started to unravel. He tried to make it as complicated as possible,

but once we sit down, we've got people who are trained to go through all the invoices.

We started to follow the chain and worked out who he was, where he was.

With the investigation gathering speed, the case took another twist.

HMRC took a call from National Rail

making inquiries about Stephen Maxwell, the rail crash hero.

Network Rail notified me that Mr Maxwell was pursuing a compensation claim for loss of earnings.

They were seeking to verify the amounts of income he'd told them he'd earned prior to the crash.

But, of course, on paper, as far as HMRC was concerned,

Maxwell hadn't been earning anything,

so here he was making a false claim for compensation.

It was time to bring him in for questioning.

On the day of the search, 30th July, 2008, when HMRC officers turned up to serve the search warrant

and carry out the search,

Mr Maxwell wasn't present on the premises,

but by telephone, he agreed to attend a local police station

for an interview under caution.

During the search of his house, several computers were uplifted

and later proved to be very useful,

because the documents we found included lots of invoices

in the name of the offshore companies, and we also found statements for the Cyprus account.

This solid evidence allowed the investigators to answer

the question that had been bugging them.

Why wasn't Maxwell named as a director or shareholder of the offshore companies?

One of the next steps was to establish that he had indeed had them set up on his behalf,

so it was a question of contacting the directors of those companies,

and they were able to tell me that that was exactly what happened.

He'd paid those people to set up offshore companies.

When I interviewed Mr Maxwell, he was very shocked.

He had no idea he was under investigation.

He appeared nervous throughout the interview.

He did answer some questions, but when it came to questions regarding the offshore companies,

he refused to answer those questions.

Ultimately, he was charged with forming a fraudulent scheme to avoid income tax.

And when it came to his day in a Scottish court,

Maxwell continued to plead his innocence.

The trial started in March, 2012, in Kirkcudbright Sheriff Court in front of a jury,

and there were many witnesses called including many bank officials

and people that Maxwell had worked with in the past.

The jury heard that Maxwell had earned up to £800 a day

in some contracts.

The Sheriff commented that it was clear

that Maxwell benefited from the fraud

and he was its driving force.

But there was only ever going to be one outcome.

At the end of the trial, the jury found Mr Maxwell guilty

of forming a fraudulent scheme

and he was sentenced to five years.

In his summing up, the Sheriff said

he didn't find Maxwell's evidence to be credible

and he also was disappointed by his conduct during the trial

in not agreeing to evidence being accepted in the court.

So Maxwell got the justice that he deserved,

but what about all the money he owed to the public purse?

At the moment, confiscation proceedings are in progress

with a view to securing some of the money that Maxwell owes.

His house is up for sale. We'll try to recover as much as we can out of that sale for HMRC.

Maxwell tried to hide his money overseas. It just goes to show,

no matter how hard you try, your crimes always end up back at your front door.