In August this year we brought you details of a £6.9 million construction tax fraud. The three Kent based men, including an accountant and a construction firm boss, have been jailed for a total of 19 years.
For two and a half years, co-conspirators Aquil Ahmed, 60, an accountant; Victor Shearer, 43, a construction services company director; and Christopher Azzopardi, 37, a payroll administrator employed by Ahmed, defrauded HM Revenue and Customs (HMRC) of VAT, Income Tax, National Insurance Contributions and Construction Industry Scheme (CIS) deductions. Taxes that workers of companies using the payroll services thought were being paid to HMRC.
The men attempted to hide their fraud by using a complex network of companies and bank accounts in the UK and offshore. But their crimes were uncovered by investigators from HMRC.
Ahmed employed Christopher Azzopardi to operate payroll services for clients through his various ‘Keepers’ companies, supposedly calculating wages and paying any tax due to HMRC through the PAYE and CIS systems. Clients were charged VAT on these services, but neither the VAT nor the PAYE and CIS deductions were paid across to HMRC.
Victor Shearer’s company, Leaner Logistics, supplies short-term contractors to the construction industry, mainly in London and the South East. Often providing hundreds of workers at a time, Shearer turned to Ahmed’s Keepers companies to run his payroll and CIS.
Over time, Shearer introduced other clients to the payroll company, who also used this fraudulent scheme. But rather than pay the tax and National Insurance to HMRC, the three men stole the money to fund Ahmed and Shearer’s lavish lifestyles.
Ahmed owned a Bentley; bought properties in the UK, USA and Turkey; and took multiple foreign holidays, including trips to Dubai and the Monaco Grand Prix. The court heard Azzopardi was in debt. Ahmed paid him around £60,000 a year, double a usual bookkeeper’s wage, for his role in the fraud. No tax was paid on his salary.
Chris Gill, Assistant Director, Fraud Investigation Service, HMRC, said:
“These men were driven by greed, abusing systems that are designed to ensure workers are paid correctly and taxes paid to HMRC. They were all professionals who knew they were breaking the law, but as an accountant Ahmed was in a position of trust, making his part in the conspiracy even more deplorable.
“These criminals thought they’d created a sophisticated fraud, and that by operating through numerous UK and offshore companies, they could hide what they were doing. But our investigations are thorough, and with assistance from authorities in Gibraltar, we unravelled the many layers they’d created and they are now paying the price for their crimes.
“This investigation shows that regardless of the resources of those involved, or how hard they try to hide their crime, no one is beyond our reach. Tax evasion isn’t victimless, it is theft from public services used by us all. If you know of anyone who is committing tax fraud please call our 24-hour hotline on 0800 59 5000 and help us stamp it out.”
Ahmed pleaded guilty to three counts of cheating the public revenue at Maidstone Crown Court on 14 June 2016. Shearer and Azzopardi were found guilty of three counts of cheating the public revenue on 21 July 2016, after a six week trial at the same court.
Shearer was also found guilty of laundering his £1.2 million cut through a bank account in Gibraltar. The court heard how vast sums were spent by Shearer, through bank transfers, cash withdrawals and by debit card, on property and high-living, ski holidays, cars and treating friends, family and clients.
Ahmed, Azzopardi and Shearer were sentenced to 7 years 8 months, 4 years and 7 years 6 months imprisonment, respectively, when they appeared at Maidstone Crown Court on Friday 21 October 2016.
HMRC and the National Crime Agency (NCA) are aware of a threat of payroll scams possibly operating in the UK, and remind businesses to ensure that they carry our ‘due diligence’ checks before appointing a payroll company to act on their behalf. NCA issued a ‘Red Alert’ warning to businesses about payroll fraud in August, read the full document here.
If your chosen payroll company sounds too good to be true, then it probably is. And if it’s playing fast and loose with the money you entrust to it, you could end up in HMRC’s firing line. And found guilty by association. Just like Victor.