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August 2022 Tax Investigation Round Up

August's round up of the latest tax investigation news and cases:

  • Hotelier commits over £473k tax fraud
  • HMRC officer given suspended sentence over £56k fraud
  • Beauty business wrongly claimed £50,000 bounce back loan

Hotelier commits over £473k tax fraud

Former owner of the Grand Hotel in Folkestone, Michael Stainer, 74, has been jailed after committing a £473,097 tax fraud. This involved non-payment of national insurance contributions to employees.

The Grand Hotel in Folkestone was divided into apartments, Stainer started to retain national insurance payments for employees instead of rightfully paying them to HMRC. He continued to commit this fraud for a total of four years. To enable him to do this he doctored pay slips so staff were unaware of the fraud he was committing.  

Stainer was found guilty of his ongoing tax fraud at Southwark Crown Court and was sentenced to three years in prison. He was found guilty of two counts of cheating the public revenue and one for fraud by false representation between the years 2011 and 2015.

Judge Gregory Perrins commented: "It’s clear to me you did not think about the impact this was having on your employees at all.

"You were deliberately deceiving them as to what was happening with their wages as they all assumed PAYE and national insurance was being paid in the normal way, as well as putting their state pension at risk.

‘You took a conscious risk with their financial security in order to keep your business afloat."

Stainer had owned the business for over 40 years and was a chartered accountant. The business went bankrupt in October 2017 and came to a final end in November 2021. Accounts showed that there was a total of £808,000 in outstanding creditors and the tax investigation revealed that when the hotel had gone bust it owed HMRC £763,205.

HMRC officer given suspended sentence over £56k fraud

Matthew Shirley from Southsea worked at HMRC for five years as a tax operations officer. Within his role he was responsible for making tax rebates and committed the tax fraud between January 2019 and May 2020.

He had access to individuals’ bank account details and had the task of resolving problems over dormant accounts. He stole the money that was intended for relatives of the deceased and transferred it into his own personal account.

The fraud went on for two years and he was caught out when a £10,000 payment was flagged by his managers that something was wrong.

Shirley appeared at Portsmouth Crown Court, sentenced to a two years’ suspended sentence after conspiring to steal £54,000. He had created false records which showed that the money had been paid correctly to the people it was intended for.

Prosecutor Alex Lloyd stated: "Mr. Shirley was employed by HMRC as a personal tax operations officer. It was part of his job to issue refunds or rebates.

"Mr. Shirley noticed an account was dormant because someone was outside of the country or had passed away.

"He would report the money paid to the person but would pay it to one of his two accounts."

When sentencing, Judge William Ashworth commented: "There is no explanation for your behaviour other than greed to provide goods and treats that you couldn’t afford.

"The money has all been dissipated. Ultimately that is money we all contribute to and money that is vital for public services."

Beauty business wrongly claimed £50,000 bounce back loan

Online hair and beauty business director Grigorijs Hacaturjancs, 34, fraudulently claimed a £50,000 bounce back loan when his company Beauty & Melody Shop Ltd had ceased trading.

His company was established in 2015 and was operating as an online retailer for hair and beauty products. The company had ceased trading in 2019, shutting down its website. Despite his company no longer trading, Hacaturjancs inflated the company’s turnover on the loan application and applied for the bounce back loan in May 2020 on behalf of the company.

The company went into voluntary liquidation in July 2021, which led to the liquidator passing on concerns to the Insolvency Service regarding Hacaturjancs’ conduct. It was discovered that his last sale was on 23rd March 2019 with no additional money being paid into that account until he received the bounce back loan of £50,000 into his account in May 2020.

After receiving this sum, Hacaturjancs transferred nearly £50,000 to a company based in Slovakia. He claimed once questioned that this was to a company supplier, however there was no record of any goods or services to warrant this.

Hacaturjancs has been disqualified as a director for 10 years, taking effect from 12 July 2022.

Chief investigator at the Insolvency Service, Dave Elliott said: "Mr Hacaturjanc’s disqualification should act as a deterrent to others who think they can profit by obtaining taxpayer-backed loans to which they are not entitled.

"The liquidator has determined that Hacaturjancs has no personal assets, however the possibility of applying for a compensation order will remain under review."

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