Seven Men Jailed for £3.7 million VAT Fraud

13 Nov 2006 05:45 PM

Four men from Surrey, two from Hampshire and one from Essex were sentenced to more than 16 years imprisonment at Kingston Crown Court today, after being found guilty of £3.7 million VAT evasion and the laundering of the proceeds of these frauds.

Robert Gray, Assistant Chief Investigation Officer for HM Revenue & Customs said:

"Tackling MTIC fraud is HMRC's top priority. It is theft of essential public revenue by organised criminal gangs, and is a Europe-wide problem. HMRC is committed to pursuing those involved no matter how complex the crime, and no matter where in the world the money trails take us. We will also actively pursue confiscation proceedings in order to strip the guilty of their assets, illegally derived from the proceeds of these frauds. The sentences being handed down demonstrate the gravity with which the courts view this crime."

The court heard the enquiry carried out by HM Revenue & Customs (HMRC) investigators was essentially in two phases involving four companies. The first phase related to Cavalier International Air Freight Ltd (Cavalier) and MGT International (Co) Ltd (MGT) who between February 2001 and June 2001 imported computer chips from the Republic of Ireland but did not account for the £1.3 million of VAT that was accrued from the onward sale of the goods.

The second phase covered the period October 2001 to March 2002 and related to the activities of KTS Impex Ltd who purported to buy computer chips from Trinity Business Systems Ltd and Raja C&P but made payments to suppliers in the Republic of Ireland. This trading resulted in a VAT loss of £2.4 million.

His Honour Judge Campbell said:

"This was a sophisticated fraud which became more sophisticated as it went on. It was difficult to investigate and prosecute. This type of fraud costs the economy dearly. All defendants merit an immediate custodial sentence."

This case was successfully prosecuted by the Revenue & Customs Prosecutions Office (RCPO). RCPO is an independent prosecuting authority that reports to the Attorney General, and is responsible for the prosecution of all HMRC cases in England and Wales.

Notes to Editors:

1. Two men were acquitted by the jury on 28 September.

2. John Palmer, (DOB 29/04/60) of Oatlands Drive, Weybridge, Surrey jailed for 3 years on two counts to run concurrently pleaded guilty to two counts of fraudulent trading encompassing the entire fraud. He was disqualified from being a company director for 8 years

3. [redacted upon request] jailed for 2 years on two counts to run concurrently pleaded guilty to two counts of fraudulent trading relating to the evasion of £1.3 million between February 2001 and June 2001. He was disqualified from being a company director for 6 years.

4. David Ryan, (DOB 25/10/63) of Alder Grove, Yately, Hampshire jailed for 9 months, pleaded guilty to one count of fraudulent trading relating to the evasion of almost £900,000 between February 2001 and April 2001.

5. The following defendants pleaded not guilty to one count of conspiracy to cheat, but were found guilty by jury on 21 September:

* Alexander Bell, (DOB 01/04/65) of Burwood Road, Hersham, Surrey jailed for 4-1/2 years. He was disqualified from being a company director for 8 years.

* David Woods, (DOB 31/08/50) of Grace Gardens, Fleet, Hampshire jailed for 2 years.

* Jonathan Bell, (DOB 20/12/63) of The Moat, New Malden, Surrey Jailed for 2 years. He was disqualified from being a company director for 4 years.

* Robert Macleod, (DOB 05/04/39 of Briscoe Road, Rainham, Essex who was additionally charged with one count of money laundering was jailed for 2 years on two counts to run concurrently.

6. Carousel fraud is a scam where criminals import high value goods such as mobile phones and computer chips, free of VAT, from other countries in the European Union. These goods are then sold in the UK with VAT attached, but the criminals disappear with the tax they have collected instead of handing it over to HMRC. A more sophisticated carousel fraud involves the repeated import and export of the goods through a series of contrived transactions.

7. The Revenue & Customs Prosecutions Office (RCPO) was created by Royal Assent on 7 April 2005. It is an independent prosecuting authority reporting directly to the Attorney General.

8. The Proceeds of Crime Act received Royal assent on 24 July 2002. The provisions relating to seizure, detection and forfeiture of cash came into effect on 30 December 2002. The Act superseded the existing powers to seize drugs related cash at the borders and extended the provisions to allow cash suspected to be related to ANY crime to be seized both at the border and inland. Furthermore, an amalgamation of other legislation in force at the time removed the distinction between drugs and non-drugs money laundering offences.

Website www.hmrc.gov.uk