Jail sentence for man who fraudulently claimed £754,000 VAT

Defrauding the Revenue over VAT does not pay as one Wolverhampton man discovered recently.

Hardeep Sangha, a phone retailer, has been jailed for falsely trying to obtain £754,000 in VAT repayments from HMRC after he claimed he had completed six deals worth £4.5 million. But after an investigation by the Revenue, forged bank statements and other paperwork were unearthed.

HMRC’s assistant director of criminal investigation, Martin Brown, said this was a deliberate attempt to steal taxpayers’ money and fraudsters must understand that the Revenue is clamping down on dishonest VAT claims.

The Treasury has lost more than £11.5 billion due to VAT fraud and HMRC recently announced that it intends to tackle the problem through the use of technology.

Accountants will be aware that the deadline to participate in the VAT Initiative Campaign expires at the end of this month. Although this campaign specifically targets people who should be paying VAT but have not registered, it is also possible to disclose VAT liabilities through other tax disclosure facilities.

In the last couple of years, HMRC has implemented various general tax disclosure opportunities, such as the Plumbers Tax Safe Plan, the Tax Health Plan and the Liechtenstein Disclosure Opportunity.

As with earlier deals, people who own up under the VIC will face a reduced penalty of 10% but they will need to settle all outstanding VAT when they submit their first VAT return.

It’s worth bearing in mind that the government has given HMRC additional funding to make tax evasion a thing of the past. Signing up to one of the disclosure agreements has to lead to a better outcome than if the Revenue finds out a business has been deliberately evading its responsibilities.

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