The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have announced their decision to ban and fine the former CEO of a small mutual insurer over tax avoidance.
It comes after a joint investigation which found that between February 2010 and July 2016, Stuart Malcolm Forsyth, CEO of the Scottish Boatowners Mutual Insurance Association (SBMIA), transferred “excessive amounts” of his own remuneration to his wife to reduce his own tax liability and took steps to “conceal that arrangement”.
According to the regulator, Forsyth paid his wife a proportion of his own salary in compensation for providing some out of hours administrative support and occasional hospitality at home.
Up until 2010, Mrs Forsyth was paid between £5,000 and approximately £10,000 per annum, which the FCA was “not obviously unreasonable for the work she was undertaking”.
However, the FCA said from 2010, Mr Forsyth transferred increasing amounts of his salary, and in most years all or part of his own bonus, to Mrs Forsyth in order to “reduce his tax liability”.
The FCA ‘Decision Notice’, which reflects the FCA’s view of what occurred, outlines the reasons for its decision to ban Mr Forsyth and fine him £78,318 for lacking integrity.
Forsyth has now referred the ‘Decision Notice’ to the Upper Tribunal, where the parties will present their respective cases.
A statement by the FCA read: “Mr Forsyth did not believe that his actions were permissible. He was aware that Mrs Forsyth only carried out a limited amount of administrative work and that the amount of her remuneration for that work was unjustified.
“By deliberately arranging these payments to Mrs Forsyth, Mr Forsyth acted without integrity to his financial benefit.”