The Serious Fraud Office has narrowed the scope of its inquiry into the collapse of retail chain BHS, ratcheting up the pressure on Sir Philip Green as he faces fresh scrutiny over the pension schemes across his Arcadia empire.

The Telegraph can disclose that investigators are focusing initial inquiries on whether there is sufficient evidence that Sir Philip or Dominic Chappell, who bought the chain from him, broke the law through "fraud by misrepresentation".

It is understood that the Serious Fraud Office (SFO) is scrutinising the complex web of financial dealings that led to Mr Chappell being perceived as a suitable buyer for the 88-year-old retailer. On the basis of their inquiry, the SFO will make a decision as to whether to proceed to a formal investigation.

The inquiry places further pressure on the billionaire amid fears that the deficit of the retirement schemes in his Arcadia empire has ballooned in recent months following a fall in gilt yields. Separately, it is understood that the Pensions Regulator has widened its anti-avoidance investigation into Sir Philip's ownership of BHS back to 2000, when he bought it for £200m.


The SFO began looking at the collapse of BHS in April. One particular area of concern is Mr Chappell's initial claims he could raise £120m of financing, which failed to materialise.

Another source of scrutiny is the £35m he secured as proof of financing from the Dellal family, who believed it was a deposit for the purchase of a building owned by the Green family. The deal never went through, and Sir Philip injected £10m into BHS as compensation. Sir Philip has argued that Mr Chappell broke an agreement to not extract funds from BHS property sales.

Frank Field MP, whom Sir Philip has threatened with legal action, met the head of the SFO last week after urging the authority to start a formal investigation. Mr Field, who co-wrote a scathing report on BHS's collapse, said the talks had been "constructive".

Sir Philip said Mr Field's comments did "not warrant a comment", while the SFO declined to comment.

The Pensions Regulator is analysing the transfer of assets and contracts between Sir Philip and his web of family subsidiaries during his ownership. BHS's pension scheme was in surplus when he bought the business.

From Left: Kendall Jenner, Cara Delevingne, Sir Philip Green and Rita Ora at a drinks reception at the British Fashion Awards. Photo / Getty
From Left: Kendall Jenner, Cara Delevingne, Sir Philip Green and Rita Ora at a drinks reception at the British Fashion Awards. Photo / Getty

The Pensions Regulator has also widened its scrutiny to the rest of Arcadia, which includes Topshop, Topman, Dorothy Perkins, Burton and Miss Selfridge, and is discussing with Sir Philip how he will plug BHS's £571m deficit.

It is thought he would have to offer only a fraction of the full buy-out amount, though he has faced calls by MPs to pay the full amount or lose his knighthood. The recent fall in gilt yields and the latest interest rate cut has meant not only has the cost of BHS's pension deficit soared, but the future funding costs of the Arcadia empire has increased. Its pension deficit widened to £189.6m last year but experts believe it is now significantly higher.

A spokesman for Sir Philip said: "Arcadia's pension scheme is well funded and well supported by its parent company, which is profitable and has no debt at the operating level".

The funding gap of British pensions hit a record high of £945bn this week after deficits rose £70bn as a result of the base rate cut to 0.25pc, said consultancy firm Hymans Roberts. "Pension schemes have been put to the sword for the sake of the broader economy," said Patrick Bloomfield, a partner.