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IT Manager’s VAT fraud attracts a stiff sentence

Although dealing with VAT may seem like a fairly boring admin task for most people, it is an important part of running any business and one which can result in a custodial sentence. This has come to the fore this week as the former director of a company which specialised in eco-electrical manufacturing has been […]

By Alex Graham on 14 May 2015
Read time: 2 minutes

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Although dealing with VAT may seem like a fairly boring admin task for most people, it is an important part of running any business and one which can result in a custodial sentence. This has come to the fore this week as the former director of a company which specialised in eco-electrical manufacturing has been sentenced as the result of a case of VAT fraud which amounted to £220,000.

64-year-old Mym Simcock was director of the company, originally known as Freepower Europe and then trading under the name of Waste2energy and her cousin Gordon Matchett, aged 71, was in charge of the business’s IT hub. The two of them were prosecuted for the VAT fraud which they perpetrated by using false invoices and the submission of inflated claims for VAT repayment which took place between January 2011 and December 2012.

They manipulated their company’s VAT records and HMRC discovered duplicated claims as well during the course of their investigations. The company, which specialised in the manufacture and sale of equipment which used the waste heat from machinery to convert into electricity, was run legitimately apart from the incidents that were uncovered by the investigation.

Suspicion was aroused when a VAT compliance officer noticed inconsistencies in the VAT claims that were submitted during February, August and November in 2011. The two defendants lived together in the same house until they were arrested in January 2013 when they had their laptops seized and they were discovered to contain copies of the fallacious invoices.

The pair originally pleaded not guilty to the charges of conspiracy to Cheat the Public Revenue, but on the first day of the court case, which was heard at Salisbury Crown Court, they both changed their pleas to guilty. The penalties they were hit with reflected the seriousness of the allegations against them: a two-year suspended sentence for Simcock, which was accompanied by a five-year ban on being the director of a company. Matchett was sentenced to a one-year prison term, which was suspended for two years, and was banned from holding a position as a company director for two years. HMRC also reported that they would seek to recover the proceeds of the pair’s criminal activity.

For those who are registered for VAT, it is vital to ensure that you comply with the regulations that govern the collection and repayment of the VAT to HMRC to avoid being investigated and pursued by the department. Contractors who are registered for VAT can avoid any problems by using a specialist contractor accountant to help them to keep their paperwork in order and ensure that they are recording and reporting everything correctly.

For information on how we could help you to save time and money when it comes to managing your finances, give us a call today on 01253 362062 or email us at contractoradvice@nixonwilliams.com.

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