Chinese restaurant owner takes away jail sentence for tax fraud

A Chinese restaurant owner who claimed more than £100,000 in VAT repayments has been jailed, after an HMRC official spotted spelling mistakes and inconsistencies in a series of forged invoices for property refurbishments

David Ying Chung Lai ran two Newcastle city centre restaurants called Mangos and Aura, and submitted documents to HMRC that appeared to show he had spent over £700,000 on renovations to the business premises.

However, during a routine visit to Lai’s restaurants in March 2012, a HMRC compliance officer noticed spelling errors on invoices that not only looked unprofessional, but were ‘remarkably’ similar to each other, despite purporting to be from different companies.

One invoice, for electrical rewiring and the fitting of a new kitchen floor totalling £45,000, appeared to be from a legitimate company based at Mariner’s Wharf in Newcastle. Lai, however, had incorrectly copied the address as ‘Marines’ Wharf. On the forged letterhead, he had typed ‘Limtied’ instead of ‘Limited’.

Further checks revealed another supposed supplier, CM Joiners and Shopfitters, did not exist, and that Lai had assigned the fictional company an address that belonged to a Tesco supermarket in Edinburgh.

Sentencing him at Newcastle Crown Court, Judge Camp said: ‘You made use of false invoices from non-existent companies and were trying to cheat the public purse by doing that. This was a persistent fraud over a number of years.

‘You did not produce them yourself but you are an economist with a degree and have worked as an accountant. It must have been wholly obvious to you this was a fraud from the outset.’

 Lai, who pleaded guilty to the fraudulent evasion of VAT, totalling £107,775, and to the possession of fraudulent documents, was given a 20 months prison sentence.

Diane Donnelly, assistant director, fraud investigation service, HMRC, said: ‘Lai bungled his way through this fraud until HMRC inevitably caught up with him.

‘The sentence sends out a clear message to those who might be involved in this type of fraud: if you steal public money from honest, hard-working law-abiding people, we will prosecute you, and you will pay the consequences.’

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Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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