HMRC’s crackdown on tax evaders continues. A recent case saw a London barrister being convicted of tax fraud and sentenced to 3 and a half years in prison. HMRC investigators found he had failed to declare or pay over £600,000 of VAT over 12 years.
Mr Pershad’s VAT registration was cancelled by HMRC in 2003 with effect from 1999, after a history of failure to submit tax returns and also not telling HMRC about a change of address. This resulted in him being unable to legally trade above the VAT threshold, which was between £54,000 in 2001 and £67,000 in 2008.
On completion and submission of his self-assessment tax returns, they showed his income had increased from £85,000 in 2001 to £346,000 in 2008, hence breaching the VAT registration limit.
During this time he continued to use his invalid VAT number on invoices, hence collecting the VAT on the fees he charged his clients but keeping the money for himself.
In another case, two businessmen have been jailed for fraud and tax evasion after hiding £500,000 in offshore bank accounts over a 6 year period.
The business men were given the opportunity to disclose their offshore accounts through HM Revenue & Customs’ Offshore Disclosure Facility (ODF). One of the two men did not register for the facility whilst the other only disclosed one of the 12 accounts he controlled.
The men ran a company offering computer technology to the automotive industry, with many of their clients based in Germany. After close inspection, sales in Germany were in the region of £1.26m, while only £49,650 of this money in sales for the same period was declared to HM Revenue & Customs. The balance was divided into offshore accounts of five shell companies registered in Mauritius and the Isle of Man, created solely for the purpose of tax fraud.
The men were jailed for 15 months and 12 months respectively. Confiscation orders were issued under Proceeds of Crime legislation in respect of amounts totaling £500,000 which must be paid within 24 months or the men will be jailed for a further 15 and 12 months respectively.
