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Five jailed in £4.3m diesel and VAT fraud

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22nd Jul 2014
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A gang that included a town councillor and a pensioner has been jailed for a total of 19 years for evading an estimated £4.3m in duty and tax through fuel and VAT fraud.

Michael Wilmot, 72, from Market Rasen, Lincolnshire, organised the fraud.

He used connections to a farmers’ buying consortium in Louth he ordered large quantities of rebated fuel, commonly known as red diesel, according to HMRC.

Unknown to the consortium, the fuel was sold on and used illegally in heavy goods vehicles (HGV) belonging to 35 different companies; all with connections to Wilmot.

Some of the HGVs had adapted fuel tanks fitted with anti-siphon devices to hide their illegal use of red diesel. During the investigation, HMRC officers discovered a factory where false fuel tanks were being manufactured and fitted to other lorries.

It is estimated that around 1.5m litres of rebated fuel was used illegally with an estimated duty loss of £672,000.

Wilmot and co-conspirator Tracie Morton, of Toft Next Newton, Market Rasen, issued invoices for the haulage work carried out by the companies, charging customers VAT on their services. They didn't pay VAT and took the cash.

None of the companies paid Corporation Tax or PAYE and NI for their drivers and employees. The total tax loss was estimated at over £3.7m.

Wilmot was jailed for four years and six months for excise fraud and seven years for conspiracy to cheat the revenue. Both sentences will run concurrently. He was also banned from being a company director for 10 years.

Morton was jailed for three years for excise duty fraud and four years and six months for conspiracy to cheat the revenue. Both sentences will run concurrently. 

Jo Tyler, assistant director, criminal investigation at HMRC said: “This criminal gang manipulated a system put in place for the legitimate use of red diesel, giving them an advantage over honest hauliers.

“They then charged their customers VAT which they kept instead of paying to HMRC. They knew that they were breaking the law, yet chose to overlook it for the opportunity of making what they wrongly assumed would be easy money at the expense of the UK taxpayer.”

Other gang members were town councillor David Strachan and transport manager Michael Taylor, both from Market Rasen, and John Raithby, a company director from Waddingham.

Derek Blackburn, a HGV driver, and sixth gang member from Market Rasen will be sentenced at a later date.

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