Company director jailed over £204k VAT refund fraud
8 Nov 2016
A Staffordshire company director, who pretended to trade in designer jewellery, IT services and sports equipment as part of a bid to claim £204,000 in VAT refunds, has been jailed for 27 months following an HMRC investigation
8 Nov 2016
Mike East, formally known as Michael Bull, submitted a number of VAT repayment claims to HMRC in 2013 and 2014 which aroused suspicion.
These related to four different companies. MD Trading claimed to be an IT consultancy services run by East (under his previous name) as a sole trader, and he was also the sole director of La Bulle Ltd which was concerned with the design and sale of jewellery.
The two other businesses were Keep Right On Couriers Ltd (KRO), which was registered to an address in London and listed Paula Wilkes as its sole director, and a business run by a man named Jake Reeves who was not VAT registered and claimed to be a self-employed jewellery designer.
HMRC officers uncovered a myriad of false documents and involving the four businesses linked to Bull, as East was then known, and the VAT repayment claims. The investigation revealed that he, and his two accomplices, had provided false invoices for goods and services that did not exist.
At Birmingham Crown Court East pleaded guilty to 10 counts of making a false statement for the purposes of the VAT Act 1994. He had attempted to claim VAT repayments totalling £204,050. During the investigation HMRC scrutinised his business records and withheld £149,912 as a precaution.
HMRC said MD Trading and La Bulle Ltd made the VAT repayment claims all based on false invoices. East attempted to reclaim the VAT by submitting 10 VAT returns to HMRC for the purchase of diamonds and sports equipment from his accomplices or other, non-VAT registered individuals. East also traded between his different businesses, raising fake invoices as a ‘purchaser’ from one identity and ‘supplier’ to another of his firms.
Wilkes and Reeves were sentenced alongside East for their part in allowing their companies to be named on fake invoices. Wilkes was given a 15 months jail sentence suspended for two years and a 200-hours community work order. HMRC investigators found that Wilkes was paid £4,026 by East for her part in the VAT fraud. Bull attempted to claim £30,851 in VAT for sports equipment purchased from this courier company on invoices but KRO Ltd had not listed the transaction in its corresponding VAT records. HMRC believes the sports equipment never existed.
Reeves, an apprentice plumber, was sentenced to 12 months jail suspended for two years, a supervisions requirement for six months and a 180-hour community work order. While unemployed, he allowed his name to be used on fake invoices for non-existent services, charged to East’s company and had been paid £18,206 for his part in the VAT fraud.
Richard Young, assistant director, fraud investigation service, HMRC, said: ‘These three criminals were attempting to steal a substantial sum of money from taxpayers. East (Bull) provided dozens of fake documents to convince HMRC he was genuinely trading under several guises - none of which was true. Wilkes and Reeves were fully involved in the fraud and took payments for their participation. HMRC is determined to clamp down on financial crime and make sure that there is a level playing field for all businesses.’