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Three financial advisers were amongst eight people jailed for their part in a VAT fraud amounting to almost £2million. The eight were part of a gang of eleven who had set up fictitious companies claiming to be trading in animal feeds, children’s clothing and fruit and vegetables. They also created business expenses associated with the non-existent companies to evade paying VAT to HM Revenue & Customs (HMRC).

The gang registered 15 bogus companies between 1998 and 2004 across Merseyside, Cheshire, Derbyshire, Leicestershire and Scotland creating fictitious sales transactions and invoices for zero-rated goods in the conspiracy to evade paying VAT whilst pocketing reclaimed VAT for fake business costs.

Eight individuals from the conspiracy were sentenced today. These were:

• John Wright (aged 46) sentenced to six years jail, Gary Edgington (55) sentenced to four years and Neil Banks (24) sentenced to 240 hours unpaid work, all from Cheshire;
• Peter Wood (52) from Manchester sentenced to four years eight months in jail;
• Michael North (70) from Stockport sentenced to 15 months in jail;
• Diane Bellingham (53) sentenced to 12 months jail and George Duncan (45) sentenced to 32 months, both from Scotland; and
• Emma Vasey (35) from Washington, Tyne and Wear sentenced to 18 months jail.

Edgington, Wood and North are all financial advisers. The other defendants are due to reappear in court at a later date.

Mike O’Grady, HMRC Assistant Director Criminal Investigations North West said:

“Those sentenced today include three self-employed financial advisors who opened bank accounts to facilitate the frauds, helped with the purchase of properties for gang members using the money obtained from the fraud and in some circumstances completed false invoices. They abused their positions of trust to line their own pockets and those of their co-conspirators and the sentences handed out by the court today reflect how seriously this crime is taken.

“VAT fraud is a serious crime which diverts vital income from the UK’s public services into the pockets of career criminals and HMRC will do everything in its power to put a stop to this.

“The gang used the fraud money to invest in property portfolios and fund their lifestyles. The total VAT fraud amounted to about £1.9million and those jailed now face confiscation hearings to recover monies and assets involved.”

Background

Suspicions were raised when some of the gang forwarded false invoices to HMRC, others deferred or aborted attempted visits by Customs & Excise (now part of HMRC) officers who were attempting to verify these business claims and make routine tax inspections of their company accounts. The case was passed to HMRC criminal investigators and more fraudulent businesses were discovered linked to the conspiracy.

During the investigation analysis of bank accounts declared by the defendants shows that the only money going into them was from the VAT repayment system – they were not genuine business accounts. The monies were then systematically withdrawn through cash machines by the individuals involved.

Hand writing samples were analysed by a forensic scientist against invoices, VAT returns and other documents proving that in many cases the handwriting on invoices matches those on documents supplied to HMRC during the fraud. Many of the faked invoices were found on computers used by the fraudsters. Most of the invoices were bogus although some included hijacked details of legitimate traders.

Following the initial investigation, arrests were made in June and October 2005 when more evidence was collected during business and house searches. The evidence gathered led to fraud related summonses being issued in March 2008 to fourteen people who were charged with conspiracy to cheat the public purse. Before the trial started in 2009 seven individuals pleaded guilty once faced with the evidence against them. The remaining seven stood trial and four were found guilty by jury and three were acquitted. Eight of the eleven fraudsters were sentenced today and three will be sentenced at a future date.