Accountant who signed everything to his wife could now lose home in tax court fight

A multimillionaire tax accountant who signed over everything he had to his wife to avoid paying debts could now lose his “chocolate box” country house after a more than £600,000 court defeat.

Tax expert John Dixon, formerly a £2m-a-year partner at leading accountancy firm Ernst & Young, has had a stellar career, during which he has been invited to Downing Street and sits on Parliamentary committees.

But he went bankrupt in 2017 after racking up a huge personal debt to the taxman; He owed more than £600,000 in unpaid tax, penalties and interest.

But when the bankruptcy trustee tried to collect his money, they learned that years earlier he had signed papers surrendering everything he had or would own to his wife, Janet, in an effort to avoid any future debt.

A judge later tossed out the documents, finding that the trusts established before the tax bill were intended to “defraud” future creditors by putting their assets out of their reach.

Mr Dixon, 70, who has previously lived a multimillionaire lifestyle with expensive cars, an apartment in Barbados and a mansion in Lochside in Scotland, says he and his wife now have to get by on their state pensions after the couple were hit with a freeze order.

The pair are in danger of losing their home, a Grade II-listed three-bed thatched-roof cottage in the Welsh Borders, after trustees launched a bid to seize and sell it.

At a High Court hearing last week, where a judge upheld the findings about his assets, Mr Dixon said he felt “attacked” by an “unfair” court process and that the threat of being evicted from his home was now hanging over him.

The accomplished accountant was 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 head of UK tax at the financial giant.

In her ruling on the dispute last year, Judge Sally Barber said Mr Dixon signed a series of declarations of trust in favor of his wife in 2010.

The affidavits claimed that he “divorced himself of all present and future assets in favor of his wife,” giving her ownership of valuable property and cars and all future income to his wife, leaving him completely dependent on her for money.

The properties included Pennymore House in the village of Furnace in Argyll, Scotland; this house was later sold and the proceeds of £126,000 were given to his wife.

The couple’s eight-bedroom period property with swimming pool, known as The Stonehouse in Woolhope, Herefordshire, was also advertised as their own and subsequently sold for a loss of £1.2 million.

They later moved into his three-bed thatched-roof cottage, Toad Hall, in the picturesque village of Eardisland, near Leominster, Herefordshire, and is now thought to be worth around £730,000.

Having signed the papers, Mr Dixon remained at E&Y as managing partner and head of UK tax for the next four years, earning £2 million a year; Mrs. Dixon, on the other hand, was a “housewife” as well as managing the fabric business.

In 2015, HMRC made a claim against him for £627,302 in September 2015, and he responded by claiming his assets were “nil”, with declarations of trust beneficially transferring “all his assets and future income” to his wife.

However, it went bankrupt in 2017 due to unpaid debt. It emerged from bankruptcy this year.

In the High Court last year, bankruptcy trustees Emma Sayers and Jeremy Willmont argued that the 2010 declarations of trust were attempts to put their assets out of reach of future creditors.

Mr Dixon himself defended the claim, arguing that he had no such intention and did so as part of inheritance tax planning and due to economic fears amid the credit crunch.

Giving the judgment, Judge Barber said he was satisfied that the representations were made “without consideration” and “for the purpose of placing assets beyond the reach of a person who might make a claim against him or her or otherwise prejudice his interests in relation to a claim which a person might make”.

He ordered the declarations to be annulled, paving the way for the trustees to pursue his assets to pay off his debts.

Last week Mr Dixon returned to court and argued that he should be allowed to appeal the judge’s decision on the grounds that what happened there was “unfair”.

Representing himself before Mr Justice Richards, he said the case was of “critical importance” to him and his wife, adding: “We are faced with an application by the plaintiffs for the possession and sale of our home. Our situation is not a happy one.”

He said the couple were limited to their state pension as their assets were currently frozen and so they were unable to obtain legal representation.

Complaining about having to defend his case against a team of senior lawyers last year, he said: “We were basically sort of attacked for three days. I think it’s very difficult to handle that kind of situation.”

Mr Dixon raised a number of procedural grounds of appeal and challenged the judge’s factual finding that his purpose in signing the trusts was to put his assets out of reach of 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.”

“When I’m earning £2 million a year, do you really think I’d jeopardize my career of so many years – I was at Number 10 Downing Street 20 times – with just over £500,000 in penalties and interest?” he said.

“It is unbelievable that I would have done this. The truth is that I am now, and have been for many years, entirely dependent on Janet for financial support.”

Deciding on the application for leave to appeal, Mr Justice Richards said Judge Barber had found that the trust representations were a means of “defrauding creditors”.

“The judge had issues to balance,” he said.

“The fact that he thinks a different outcome exists does not come close to the threshold of a realistic challenge to the actual findings.”

Although he acknowledged that the case was a “major issue” for Mr Dixon, he concluded: “I have come to the very clear conclusion that there is no appeal here that has a sufficiently realistic prospect of success.”

The motion to appeal was rejected, with the trustee’s application for the ownership and sale of the couple’s home to be lodged at a later date.