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December 2023 Tax Investigation Round Up

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

  • Carpenter commits over £50k covid fraud
  • Hotel owner jailed over Eat Out to Help Out claims
  • Car dealer jailed for £80k fraud
  • Fake eco-investor refused to repay £2.7m

Carpenter commits over £50k covid fraud

James Alexander, director of Ebstree Solutions Limited in Wolverhampton, a joinery business, has been banned for 10 years after fraudulently claiming a covid bounce back loan.

When applying for this loan, Alexander falsely  overstated his business turnover to be eligible for the bounce back loan of £50,000. This scheme was launched by the government in May 2020 during the pandemic to help businesses get back on their feet.

The company ‘Ebstree Solutions Limited’ was established in February 2016 and had last filed accounts for a dormant business in March 2019. Recently after the scheme was launched however, Alexander falsely submitted a loan application, claiming his business turnover was £212,000. This enabled him to borrow £50,000.

When looking at Alexander’s accounts, during the period of March 2018 to March “019 it showed the company turnover to be £7,490 and for the year ending March 2020 it was £33,187.

Therefore as a result of the overstatement of his business turnover, Alexander borrowed £41,703 more than what he should have been entitled to.

In July 2023, the company was dissolved and administrators were appointed from Fortis Insolvency. The bank lender claimed £50,113 for the outstanding fraudulent loan, £5,134 was also owed to HMRC in corporation tax and national insurance.

Alexander has now been banned for a total of 10 years as acting as a company director.

Hotel owner jailed over Eat Out to Help Out claims

Shahid Naseeb Ahmed, a hotel owner in Manchester, has been jailed for making multiple fraudulent claims between April 2020 and August 2021 from the government’s Eat Out To Help Out Scheme. At the time he was sole director for the Merchants hotel in Manchester.

Ahmed falsely claimed £61,165 from Eat Out To Help Out and an additional £51, 708 for furlough payments. HMRC became suspicious of his actions when he had received payments of £112,873 and his claims were then blocked.

HMRC investigations were then launched. Discovering that Ahmed did not cater at all in his hotel. He did not offer food, just tea and coffee facilities in hotel bedrooms.

Ahmed continued to commit fraud by duplicating his claims for two separate hotels. These were Merchants Hotel Ltd and Merchants MCR, when in fact there was only one hotel that existed. He also abused the Coronavirus Job Retention Scheme, claiming that some staff were full time when they were actually part time.

This enabled him to claim that they were paid more than they actually were. He also lied and said that the hotel was closed for periods of time, even though it had opened again for part of the period.

Ahmed was arrested on 20 October 2021, here he admitted that he was sole director of the hotel. He also admitted that he had made false claims for both government schemes.

In November at Manchester Crown Court, Ahmed was jailed for 40 months, following a trial where he pleaded guilty to 25 counts of fraud on 1 August.

Senior crown court prosecutor Maqsood Khan, of CPS Mersey Cheshire’s fraud unit, stated: ‘Shahid Ahmed cynically took advantage of two government schemes designed to help businesses survive a national crisis.

‘He submitted fraudulent claim after fraudulent claim over many months – his fraud was systematic, deliberate and planned. He tried several ways to get as much money as he could. There are lots of demands on the public purse and these schemes were designed to help genuine claimants. People like Shahid Ahmed undermine the system and take money that is badly needed elsewhere.’

Car dealer jailed for £80k fraud

Jonathan Peter Nolan, a car dealer from Southampton was sentenced to two years imprisonment for fraudulently selling cars that he did not own.

During a HMRC tax investigation, the offences were discovered in 2020 as part of an insolvency service investigation into possible bankruptcy offences.

As the fraud offences happened in 2017 and 2019, Nolan was already serving a suspended sentence for a previous conviction, so this offence immediately resulted in a two year custodial sentence.

In 2017, on different instances, Nolan sold five cars to a car dealership. He was however not the legal owner. On committing these frauds, he gained a total of £75,400.

In January 2018, Nolan sold the same car to two different dealerships, one day apart. This resulted in him gaining a further £6,850 through his fraudulent activity.

Glenn Wicks, chief investigator at the Insolvency Service, commented: ‘Nolan deliberately ripped off two car dealers who thought they were making legitimate purchases. I am pleased our investigation uncovered his fraudulent behaviour and has resulted in a custodial sentence.’

Initially, he denied his charges but entered guilty pleas on the day of the trial.

Previously, in 2016 his conviction was for failing to disclose around £60,000 in income from a previous bankruptcy. Therefore receiving a 12 month suspended prison sentence.

Fake eco-investor refused to repay £2.7m

One fraudster who ran a fake £65m ‘green’ investment scheme evaded £6.5m in tax has been sentenced to an additional jail term, for not paying a confiscation order.

At Westminster Magistrates’ Court, Rodney Whiston-Dew, was served a further eight years and ninth months imprisonment after failing to pay a £2.7m confiscation order due from gains made from a fraudulent eco-investment scheme.

A group of five promoted an eco-scheme, convincing investors that they were operating environmental research and development projects into carbon credits in Brazil and China. Investors were led to believe that they would be eligible for tax relief and could claim to HMRC.

The scheme was believable, a total of 730 investors signed up. This included a range of celebrities such as comedians, sports stars, relatives of politicians. The fraudsters managed to gain £65m in investments in the ‘green’ scheme. Only £16m however was spent legitimately on planting trees.

The group stole £20m of the investment money, they laundered it into bank accounts and secret trusts, and they spent the money on lavish properties in London, Australia and Dubai. Also failing to pay £6.5 in tax.

Whiston-Dew was sentenced in 2017 alongside four others for cheating the public revenue.

Following this, two years later, the Crown Prosecution Service secured a confiscation order through the courts for £2,732,788.96. It has now amounted to £3,463,224.11 due to interest.

The CPS took Whiston-Dew back to court as he had only paid back £70,409.56 meaning that the court could recover the non-payment of the full amount and it was requested that the District Judge activated an additional prison sentence instead.

Adrian Foster, chief crown prosecutor of the CPS proceeds of crime division, said: ‘Rodney Whiston-Dew failed to pay back the £2.7m that he owed, so the CPS have returned him to court and now he has had an additional default sentence of eight years and nine months imprisonment on top of his original sentence.

‘We worked with HMRC to make sure he did not benefit from the proceeds of his crime, but he has only paid back a paltry amount of his available assets.

‘Even when fraudsters are convicted and sentenced the CPS will continue to robustly pursue them for the money they owe, or they risk remaining in prison for many more years if they fail to pay their order in full.’

The other fraudsters, Evdoros Demetriou and Michael Richards, were returned to prison in 2021 to serve an additional nine and six years in prison for failing to pay back £4.6m and £9.9m. In total, all five offenders were told to repay the amount of £20.6m.

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