A former tax partner at Ernst & Young, who once earned £2 million annually, has failed in a High Court bid to prevent the seizure of his cottage over a £600,000 unpaid tax bill. John Dixon, 70, was declared bankrupt in 2017 owing HM Revenue and Customs (HMRC) £600,000 in tax, penalties, and interest.
Trustees managing Dixon's bankruptcy sought to recover funds for creditors and discovered that years prior, Dixon had signed trust declarations transferring all his existing and future assets to his wife, Janet. A judge ruled in 2023 that these arrangements, established before the tax bill arose, were designed to place assets beyond the reach of potential creditors. This ruling cleared the way for the trustees to pursue the couple's property.
The couple now faces the potential loss of Toad Hall, their Grade II-listed three-bedroom thatched cottage in Eardisland, Welsh Borders, which is valued at approximately £730,000. Trustees have initiated proceedings to take possession and sell the home.
During a recent High Court hearing, Dixon argued that the court process had been "unfair" and that he and his wife were living in fear of eviction. He represented himself in the proceedings, stating that a freezing order on the couple's assets meant they were surviving on state pensions and could not afford legal representation. Dixon claimed he felt "mugged" by the legal process and found it difficult to manage the case against experienced lawyers.
Dixon contended that he had no intention of shielding assets from creditors when the trusts were created in 2010, as he did not have a tax debt at the time. He asserted that the arrangements were part of inheritance tax planning and were influenced by concerns about the economic climate following the 2008 financial crisis. He highlighted his successful career, which included numerous visits to Downing Street and appearances before parliamentary committees, questioning why he would jeopardize it for a tax debt of that amount when earning £2 million annually.
However, Judge Sally Barber had previously concluded that the trust declarations were intended to shield assets from anyone who might later make a claim against him. She ruled that the trusts should be set aside to allow trustees to pursue assets to satisfy his debts.
Mr. Justice Richards, presiding over the appeal hearing, affirmed that Judge Barber was entitled to find that the trusts were intended to defraud creditors. He stated that Dixon's belief that a different conclusion was available did not meet the threshold for a realistic challenge to the findings of fact. Refusing permission to appeal, Mr. Justice Richards concluded that there were no sufficiently realistic prospects of success.
Prior to the tax demand, Dixon had transferred significant assets to his wife, including proceeds from the sale of Pennymore House in Scotland, which yielded £126,000 for Mrs. Dixon. Their former eight-bedroom home, The Stonehouse, was also transferred to Mrs. Dixon before being sold for £1.2 million. Despite these transfers, Dixon continued as Ernst & Young's managing partner and UK tax chief for an additional four years, earning approximately £2 million annually. Mrs. Dixon was described in court as a housewife who also managed a fabrics business.
The ruling means that trustees can proceed with their application to take possession and sell Toad Hall.