Two court cases at opposite ends of the country have resulted in jail terms for VAT fraud. On 16 May a Surrey man was jailed for 12 months for attempting to pocket nearly £47,000 in fraudulent VAT repayments.
John Patrick Cahill was investigated by HMRC following suspicions about the accuracy of VAT refund claims he submitted between January 2011 and January 2012. These claims were monitored as part of a London fraudulent repayment tax taskforce launched in 2011.
Taskforce enquiries revealed that his Mayfair business address was simply a mail-drop service. Investigations showed that although Cahill claimed to trade as an energy efficiency inspector his company made no sales for the period.
Cahill submitted false VAT returns claiming business expenses of around £237,000 at the 20% VAT rate. The ‘expenses’ were largely fictitious or not business-related and therefore no VAT repayments were due. The sum of £27,225.71 was actually paid out.
HMRC’s assistant director for criminal investigation, Peter Millroy, said: “This was a blatant repayment fraud set up to steal from HMRC and the wider tax-paying public. Our message is clear: if you choose to defraud the tax system and pursue this type of crime, we will track you down.”
The case followed the jailing of a Dundee businessman, who pleaded guilty to using seven aliases to commit a £166,000 VAT fraud. Brinner Frank Patino Sabando was sentenced to 18 months at Dundee Sheriff Court after an investigation by HMRC.
Sabando registered a company – Fresca Ltd – and then lied to reclaim VAT he wasn’t entitled to. The company provided water coolers to businesses.
Anne-Marie Gordon, assistant director of criminal investigation at HMRC, said: “Sabando used aliases to set up the company and over 22 months made fraudulent VAT repayment claims. He knew that he was breaking the law, yet chose to overlook it for the opportunity of making what he wrongly assumed would be easy money, at the expense of the UK taxpayer. He will now have to pay a very high price for his criminal activities.”
During the investigation it was discovered that, in many of the VAT repayment returns submitted for Fresca Ltd, the value of purchases didn’t tally with the transactions shown in the company bank account. The figures used in the fraudulent returns, had they been true, would have meant that the company was operating at a loss, selling products for substantially less than had been paid for them.