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Following a six-year investigation by HMRC, and two separate criminal trials, a man behind a £54 million VAT fraud has been jailed for 15 years, the longest sentence ever handed down by a British court for this type of crime.

Emmanuel Hening, a trader with dual Belgian/French nationality, was found guilty on three counts of 'missing trader' fraud at Worcester Crown Court, along with other members of the eight-strong crime gang, bringing the total jail sentences for the gang to 38.5 years. Three men from the West Midlands, two from Lancashire and one from Wales were sentenced at an earlier trial. A remaining member of the gang, a woman from Birmingham pleaded guilty and is awaiting sentencing.

Chris Harrison, Deputy Director, Investigation for HMRC said the sentence should send out a clear message to others who may contemplate such criminal activity.

The court heard the multi-million pound fraud centred on the mobile phone industry. Investigations by HMRC began in 2000 and involved breaking the audit trail of businesses based in the UK, Luxembourg and France through a company called Handycom SA operated by Hening. Hening claimed on invoices to be importing large numbers of European specification mobile phones, with two-pin plugs, into the UK. The numbers he claimed to be importing far exceeded any legitimate commercial demand.

The phones were purportedly imported into the UK VAT free by various companies set up by Hening. He then sold the phones on paper charging VAT that was never paid over to HMRC. These companies then went 'missing'. The phones were then 'sold' down the line to various 'buffer' traders before they were exported back to Hening. Each company made an agreed profit margin on the phones. The companies were based in the West Midlands, Lancashire and the Isle of Man.

In sentencing Hening, the Judge commented: "You are responsible, in my judgment, for the genesis of the fraud, through your control over the foreign importers and your control over the UK missing traders, and because of the reality that the evaded VAT was paid to you, into your bank accounts."

As in all successful prosecutions, confiscation proceedings are being pursued in order to strip the guilty of their assets, illegally derived from the proceeds of these frauds.

These cases were 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.

Sarah Laing
Editor, TaxationWeb News

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