Three men involved in a fraudulent £29.5m claim for research and development (R&D) tax relief on a bogus IT project have been jailed for a total of 21 years
Birmingham Crown Court was told that Matthew Sutherland was the architect of the crime and used his company, Convergica (Clinical Information Systems) Ltd to claim tax relief of £29.5m against a purported £137m spend on developing an IT healthcare system for two countries in the Middle East.
Mohammed Zaheer and Mohammed Khan were the frontmen for companies used to carry out the fraud, which came to light when HMRC requested supporting documents for a claim for SME R&D relief, which allows companies to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction, and to claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss.
Convergica claimed to have outsourced the programming work for the IT system to Mediatronix Ltd, a company controlled by Khan, which was purportedly paid more than £137m by Everbright Financial XII Ltd, controlled by Zaheer, on Convergica’s behalf.
A falsified bank statement was submitted in January 2016, prompting an investigation which saw Sutherland and Khan arrested. All three men were charged with fraud in March 2018, and the claim was not paid out by HMRC.
Kath Doyle, deputy director, Fraud Investigation Service, HMRC, said: ‘These men tried to extract an astronomical sum of money by claiming tax relief from a scheme designed to help legitimate companies do work that seeks to make advances in science and technology.
‘This wasn’t research and development, it was out and out fraud. HMRC will continue to create a level playing field for law abiding businesses by rooting out the minority who seek to abuse these schemes, as this result clearly shows.’
The men pleaded not guilty to conspiracy to cheat the public revenue. They were found guilty after an eleven week trial.
Sutherland was jailed for nine years, Khan was jailed for seven years and Zaheer was jailed for five years. Sutherland was jailed in his absence as he is in Dubai and is too ill to travel.