The schemes involved selling subsidiaries with large tax liabilities to trusts based in offshore

The schemes involved selling subsidiaries with large tax liabilities to trusts based in offshore tax havens, such as Guernsey.Although the Revenue lost a lengthy legal battle with the companies in what E&Y calls "a small number of `money-purchase' schemes", the law was changed in the 1994 Budget and documents were passed to the Revenue's special investigations unit. It is believed that it has examined whether purchasers involved involved in the schemes and their advisers tried to cheat the Revenue.E&Y has been conducting its own investigation and, although this is not yet completed, it is understood it is not expecting any further departures. But, according to the latest issue of Accountancy Age magazine, it is known that the case dates back to 1993, when officials attempted to block a series of avoidance schemes operated by UK companies. Mr John's home and the offices of other professional advisers are understood to be among the others.The Revenue last night refused to comment on the investigation. Five E&Y offices, including its London headquarters, were among 40 premises raided by Revenue officials last month. He left last Friday, "with immediate effect".The move follows raids in what has been described as "the most spectacular investigation ever launched" by the Revenue.

A leading partner in Ernst & Young, one of the Big Six firms of chartered accountants, has resigned following an Inland Revenue investigation into suspected tax fraud. The firm, which last month announced it was planning a merger with fellow Big Six practice KPMG, said in a statement that Robin John, who worked in the firm's London financial services office, "has decided that it is in his interests and those of the firm" to resign from the partnership while the inquiries continue. The resignation of a prominent tax partner brings to a head a long-running dispute with the Inland Revenue, which has made big raids on the offices of several firms Roger Trapp reports. Though Vickers has not ruled out using the Rolls-Royce sale proceeds to mount a huge share buyback, the proceeds are likely to be invested in the group's marine propulsion business and spent on small- scale acquisitions.. That is more than the stock market capitalisation of Mayflower. Brokers calculate that Mayflower, which is valued at pounds 477m, would need to launch a one-for-one rights issue to fund just the acquisition of the Cosworth and propulsion systems businesses, reckoned to be worth about pounds 390m.But there would be a heavy goodwill write-off involved in buying Rolls, while the tanks business might be worth as little as pounds 70m once a bidder took into account the costs of closing production facilities as its Challenger tank orders run out.The Vickers defence is likely to centre on the ability of Mayflower to fund a bid. City sources said yesterday that it was unlikely Mayflower would have made any move without consulting with BMW since it was a important supplier to Rover, and because BMW was supplying the engine for the new 12-cylinder Rolls Royce.BMW also has a joint venture with the Rolls-Royce aero engine company which owns the rights to the Rolls Royce name used by Vickers.Mr Forestier-Walker, who puts the break-up value of Vickers at pounds 920m, also questions whether the Rolls car division was what Mayflower is primarily interested in, suggesting its real targets are the Cosworth engineering and propulsion businesses.Rolls is reckoned to be worth pounds 500m-pounds 600m.

"It is a close run thing but I think they would need a bigger brother to do it," he said.One potential partner is BMW, the German car maker which already owns Rover. Mayflower, advised by BZW, is said to have been sizing Vickers up for two years and to have begun making serious bid preparations in the late summer.Mayflower's biggest shareholders are Mercury Asset management with just under 10 per cent and Hill Samuel and Flemings Investment Management, each with about 7 per cent. Schroders could have a pivotal role to play as it holds 4 per cent of Mayflower and 20 per cent of Vickers.Meanwhile, there were indications that Vickers, which is advised by Lazards, could mount a bid defence involving a cash hand-out to shareholders from the pounds 500m it hopes to raise by selling Rolls-Royce, a plan which was announced last week.Clive Forestier-Walker of the brokers Charterhouse Tilney, cast doubt on whether Mayflower had the firepower to proceed without a partner. But, as Michael Harrison and Chris Godsmark report, doubts are growing about Mayflower's ability to finance an offer on its own.