Bankrupt Couple Diverted Inheritance to Holiday Instead of Settling Massive School Debt
A bankrupt couple who inherited more than £200,000 chose to spend part of the windfall on a luxury holiday rather than paying off substantial private school fees exceeding £106,000, according to evidence presented at the Old Bailey in London. Gareth Sowter, aged 51, and Kim Sowter, aged 46, enrolled all four of their sons at St Edmund's College in Ware, Hertfordshire, a prestigious institution where annual fees can reach £40,000.
Years of Deception and Deliberate Non-Payment
From 2012 onward, the now-divorced pair consistently failed to pay the school, despite repeated demands from accounts managers. For years, they fobbed off these requests by insisting they were awaiting a cash windfall from a will. When the inheritance of £208,166 finally arrived in 2020, however, the couple refused to settle their debt. Instead, they diverted the funds for personal use, including spending a portion on a holiday.
Gareth Sowter, a convicted VAT fraudster, further complicated matters by funneling money to family members, friends, and even one of his teenage sons in an effort to shield the assets from creditors. Additionally, over £15,000 of the inheritance was paid to solicitors who had represented him in his previous VAT fraud case.
Court Proceedings and Sentencing
Appearing at the Old Bailey, Kim Sowter admitted to two counts of fraudulent transfer of property, while her ex-husband pleaded guilty to eight similar charges. She avoided immediate imprisonment, receiving an eight-month sentence suspended for 18 months. In contrast, Gareth Sowter was jailed for 26 months.
Judge David Jeremy criticized Sowter for using money that should have gone to the school to "live beyond his means." The court also heard details of Sowter's prior conviction for a £367,812 VAT fraud, committed over three years by inflating bills and forging bank statements to claim refunds from HM Revenue and Customs. He had received a suspended 24-month sentence for these crimes in May 2021, but it was later revealed he had been hiding inheritance money with associates just a month before that sentencing.
Judge's Condemnation and Broader Implications
Judge Jeremy highlighted the couple's misuse of their own son as a vehicle for fraud, transferring £3,400 to him to keep cash from the school. He told Gareth Sowter, "You did not protect your children but you gave them an education which has come from lies and fraud." The judge also noted that fee-paying schools are often "a soft touch for unscrupulous parents" because they operate on trust and are reluctant to expel students for non-payment, harming not just the institution but also honest parents who make sacrifices to afford such education.
Addressing Kim Sowter, the judge acknowledged she acted under her husband's direction but was fully aware of the deception, including the VAT fraud. During sentencing, she shook uncontrollably in the dock. Sowter, who claimed his previous fraud was "a poor decision," was told by Judge Jeremy that it represented a long-term choice driven by a "deep sense of entitlement" and willingness to be dishonest.
Insolvency Service Response
Chris Wood, Chief Investigator at the Insolvency Service, emphasized the seriousness of the case, stating, "When someone is declared bankrupt, the law requires any money or assets they have to be used to repay what they owe, not to be given away to family and friends." He pointed out that Gareth Sowter had promised the school he would use his inheritance to clear the debts but did the opposite, while Kim Sowter compounded the dishonesty by moving money and using some for family holidays. Wood warned that such abuses of bankruptcy protections, designed to ensure fair treatment of creditors, should expect serious consequences.
The case underscores the legal and ethical obligations of individuals in bankruptcy, particularly when it involves diverting funds meant for debt repayment to personal luxuries like holidays, at the expense of creditors such as educational institutions.
