[2025] EWHC 2759 (Ch)

Kieran Corrigan, the managing director and shareholder of the Claimant, had with the assistance of tax counsel, Michael Sherry, developed a tax mitigation structure involving the use of research and development relief (“R&D relief”) in the Corporation Taxes Act 2009 (the “2009 Act”). As part of that, Mr Corrigan e-mailed on 8 January 2014 a detailed set of draft instructions to Mr Sherry containing the proposed structure (the “Structure”).

As I explained in [222] of the 2023 Judgment, while R&D relief is a widely used statutory relief, the Structure did not involve pharmaceutical or other companies that normally engage in R&D claiming standard R&D relief at 100% of the expenses incurred on R&D. Rather the Claimant’s possible structure provided for significantly enhanced R&D relief and allowed companies who would not otherwise involve themselves with R&D being able to take the advantage of this R&D relief. It combined the use of those provisions with an LLP structure to allow the investors in the LLP to obtain such relief, rather than the person doing the R&D work. By fitting these features together, Mr Corrigan had come up with a possible structure that was not available on the market. I explained the standard R&D relief and how it compared to the enhanced relief (“R&D sub-contractor relief”) at [22]-[39] of the judgment.

Mr Corrigan considered both variants of the Structure that had a sub-contractor who was “unconnected” for the purposes of the 2009 Act and those who were “connected”. Using a connected sub-contractor necessitated monitoring the categories of sub-contractor expenditure if the tax relief was to be obtained. By using an unconnected sub-contractor, a larger fund, where the research might for example be carried out all over the world and therefore where it might not be feasible to monitor the categories of sub-contractor expenditure, one could obtain tax-relief without needing to restrict the categories of intended sub-contractor expenditure, as long as the money was to be expended on R&D: [224]. If the LLP traded and the structure otherwise worked for tax purposes, this would attract R&D relief of 181.25% on the sub-contractor payment: [229].

Therefore, the most important feature of the Structure for the purposes of the claim was the use of R&D sub-contractor relief, including the lack of a need for the expenditure of the sub-contractor to be limited to particular categories: [229].

Turning to the Defendants and OneE more generally, as I set out at [7]-[10] of the 2023 Judgment:

“7.

The First Defendant, OneE Group Ltd (“OneE Group”), is an English company, incorporated on 30 January 1997, that is the parent of a group of companies which collectively develops and markets tax efficient investment products. Three of the subsidiaries of Group, all of which are English companies, are (1) OneE Tax Ltd (“OneE Tax”), incorporated on 1 June 2006, which was a party to the NDA referred to above but entered voluntary liquidation on 10 March 2015, (2) OneE Consulting Ltd (“OneE Consulting”), incorporated on 20 September 2012, which the Defendants allege developed the Nemaura structure, and (3) OneE Investments Ltd (“OneE Investments”), which the Defendants allege promoted the Nemaura structure. Where the evidence does not refer to a specific OneE group company, I shall simply refer to “OneE” in this judgment.

8.

The Second Defendant, Bashir Timol, has been a director of OneE Group from 30 January 2007 to date, was a director of OneE Tax from 1 June 2006, was a director of OneE Consulting from 20 September 2012 to 15 July 2014, and was a director of OneE Investments from 16 August 2013 to 1 June 2015.

9.

The Third Defendant, Dominic Slattery, has been a director of OneE Group from 4 August 2014 to date, was a director of OneE Tax from 23 March 2011, has been a director of OneE Consulting from 20 September 2012 to date, and was a director of OneE Investments from 16 August 2013 to date.

10.

The Fourth Defendant, Timothy Johnson, was a director of OneE Consulting from 1 April 2014 to 15 November 2015, a director of OneE Investments between the same dates. Mr Johnson was an inhouse tax expert at OneE from before 2014 until 31 July 2022.”

I dealt with the creation of the OneE Group and the origins of its involvement with Nemaura at [50]-[53] of the 2023 Judgment. What became the OneE group was founded in or around 2006 as 1^st Ethical by Sufyan Ismail, who as the managing director and 80% shareholder, and Mr Timol the other director and holder of the remaining 20% of shares. The business provided advice on Sharia-compliant investments and tax advice in relation to the drafting of Sharia-compliant wills. In or around 2007, as part of an intended diversification of the business, Mr Ismail and Mr Timol had invested in a company called Nemaura Pharma Ltd (“Nemaura”) founded by Dr Faz Chowdhury. Mr Timol thought that he had a shareholding of somewhere greater than 10% and less than 20% and Mr Ismail a slightly smaller one. The opportunity came to them via an accountant who referred them work, who had a client that was looking to raise money to fund some early stage clinical research. Over the years that followed, Nemaura’s clinical work proceeded in parallel with OneE evolving into a group with various companies: OneE Group at the top, and OneE Tax, OneE Consulting and OneE Investments sitting one rung below in the corporate structure. Between them these companies dealt with tax disputes and investigations, investment, tax avoidance products and consultancy work, with the names of the different subsidiaries indicating the type of work that they did.

Following the publication in December 2012 of draft legislation containing a general anti-abuse-rule (“GAAR”), which was ultimately passed on 17 July 2013 as part of the Finance Act 2013 and which impacted on the viability of a number of OneE’s existing products, the OneE business considered as a matter of priority what alternative sources of revenue could be provided: [55]-[56]. Mr Ismail identified by an e-mail to Mr Slattery and Mr Timol on 29 March 2013 four key areas where he considered that OneE needed to create a workable investment offering in, one of which was Nemaura: [57], [59].

As part of the process towards this in respect of Nemaura, OneE sent tax law instructions to Mr Sherry on 25 March 2013: [62]-[65]. Mr Slattery had prepared a draft and Mr Timol had added by e-mail the relevant details of what Nemaura did and its structure, as apparently invited by Mr Slattery: [61]. The instructions asked various questions about the tax analysis of a new investment structure that OneE Tax was considering for corporate clients who wished to become members of a LLP in order to stand to make a return in years to come and reduce their current year liability to corporate tax. The investment opportunity was referred to as Nemaura Pharma, which was stated to be the trading name given to an early stage group of companies which collectively formed part of a multi-platform pharmaceutical business focused on developing transdermal drug delivery and diagnostic products: [62]. Mr Sherry was sceptical as to a number of features of the structure and asked for further information about it: [66]. There is no sign of the tax treatment of the structure being developed further by OneE with external lawyers until the May 2014 instructions referred to in (12) below.

There were no documents at this stage, or indeed before the 4 February 2014 meeting with OneE referred to below, containing any reference to using R&D sub-contractor relief for the Nemaura structure: [165(2)]. Rather, the tax analysis was stated in OneE’s instructions to Mr Sherry to be “relatively simple”, namely that “the LLP obtains a current year loss as the tax treatment follows GAAP and [the third party investor] can utlize this loss against its other profits”: [65]. That current year loss would come about the following way: the third party investor would put up 15% of the investment in the LLP, and OneE Investments would raise the other 85% by bank borrowing, the LLP would contract with Nemaura Pharma to conduct the testing and a contract for services with OneE R&D, and the LLP would make two payments: to OneE Tax of 10% of the amounts invested in the LLP and to OneE R&D of the other 90% as a one-off payment under the contract for services: [63]. The LLP would only receive a return from Nemaura Pharma if the stage 1 and stage 2 of the testing succeeded. However, part of the aim was to allow a third party investor, even if the testing did not succeed, to claim that 99% of the LLP’s current years losses could be set against its own current year profits, providing corporation tax relief of up to 24% notwithstanding the fact that the investor put up only 15% of the investment: [64].

Mr Corrigan’s dealings with OneE began at the end of 2013. Having contacted OneE on or around 4 December 2013, Mr Corrigan met Mr Slattery on or around 10 December 2013: [73]. Mr Corrigan e-mailed Mr Slattery after the meeting to suggest a follow-up, and Mr Slattery responded, copying in Mr Timol and Mr Johnson, suggesting a meeting be arranged in the new year with Mr Slattery’s fellow director Mr Timol as well: [74]-[75]. The meeting ultimately took place on 4 February 2014 between Mr Corrigan, Mr Slattery, Mr Timol and Mr Johnson: [91], following the signature by Mr Slattery and Mr Corrigan of an NDA produced by OneE: [77]-[80]. Between the 10 December 2013 and 4 February 2014 meeting, the draft instructions setting out the Structure had gone to Mr Sherry: (1) above. I found, among other things, that Mr Corrigan explained his thoughts on sub-contractor R&D relief to the other attendees at the 4 February 2014 meeting, and that one of the other attendees raised the possibility of using sub-contractor R&D relief in the Nemaura structure as part of their reaction to Mr Corrigan explaining how sub-contractor R&D relief could be used: [165(1), (6)].

There then followed a follow-up dialogue between Mr Corrigan on one hand and one or both of Mr Slattery and Johnson on the other, for a few months, but came to an end on or around 8 May 2014, save for a short dialogue between Mr Corrigan and Mr Johnson in late June 2014 to seek to organise a call that ultimately does not appear to have taken place: [92]-[110], [116].

On 13 May 2014, Mr Slattery e-mailed Mr Johnson and Mr Owens of OneE, attaching draft instructions to seek tax advice from DLA Piper, asking for them to be reviewed, particularly the tax analysis: [110]. The instructions to DLA included an unconnected sub-contractor structure in order to seek sub-contractor R&D relief of 181.25%: [114]. DLA do not appear to have advised. Rather instructions were sent to a tax barrister, Rory Mullan (now Rory Mullan KC), on 1 August 2014 and he provided his first opinion on 26 September 2014: [117], [124].

The structure was promoted by OneE at its 7 October 2014 conference at the Lowry Hotel in Manchester, the papers for which included a paper on Nemaura’s business and a presentation on how the structure would work: [125]. The latter included a slide “Tax Treatment for Corporates” which stated that the corporates were entitled to 181.25% relief on certain conditions.

Mr Johnson continued to liaise with Mr Mullan in October and November 2014 over various elements of the tax advice, involving Mr Slattery at points: [126]-[130].

In the meantime, at some point before or on 23 October 2014, Mr Corrigan had become aware that the Nemaura structure had been presented at the 7 October 2014 event and obtained a copy of the presentation: [132]. Mr Corrigan had a dialogue over the point, and Mr Johnston was involved in some of the internal e-mails on the topic: [133]-[139]. I shall return to this below because further e-mails from this period have subsequently been disclosed.

The Nemaura structure was disclosed at other subsequent events and on subsequent occasions, and documents distributed relating to it: [274].

Mr Timol would have been involved in signing off the decision to implement and market the Nemaura structure: [279], as he accepted in cross-examination in relation to marketing at least: pp.519-520 of the transcript for day 4 of the original trial. As explained below, I have considered this matter afresh, as I have all matters concerning Mr Timol’s role.