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VAT fraudster ordered to repay £2.4m

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13th Sep 2013
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A VAT fraudster has been ordered to repay crime profits of £2.4 million within six months, or face a further seven years' jail time.

Businessman Daamin Kaif, from Badgers Hill, Virginia Water, Surrey, was jailed for six-and-a-half years in 2011 for his part in a £38m VAT fraud.

He was one of a gang of 10 who received prison sentences for the offences, the Revenue said.

HMRC said its investigators had uncovered a "complex conspiracy" involving a chain of companies importing mobile phones and computer equipment from Dubai via Europe, set up solely for the purpose of defrauding the UK government.

Two of the companies, Middlesex-based Sky Computers UK Ltd and Maxro Technology Ltd, based in Surrey, were at the centre of the plot, HMRC said.

The goods were sold through a series of companies with VAT added, but the tax was never paid to HMRC.

Once the goods had been sold on a number of times they would be exported back to the EU. The exporter would then claim a VAT repayment on the purchase of the goods, but this was never paid in the first place.

The money would then be siphoned off and laundered through overseas companies in Dubai and Spain and the gang would divide the dishonest profits of the fraud.

Assistant director of criminal investigation for HMRC David Cowie, said Kaif enjoyed a "lavish lifestyle" funded by his involvement in the fraud. He made numerous trips to Dubai, invested in property, including a house worth £2 million in Virginia Water, Surrey, and had purchased a piano from Harrods, London, for £14,000..

Increased worry about VAT fraud has led to a sharp rise in the number of that VAT refunds that HMRC has delayed, Accounting WEB reported in April.

Delays in VAT refunds to businesses rose by 44% in the last year, according to law firm Pinsent Masons.

Jason Collins, a tax specialist at Pinsent Masons, said that HMRC’s extra scrutiny of VAT refunds was due to the rise in UK VAT to 20% in January 2011, which made it more profitable for fraudsters to exploit European VAT law loopholes in the UK than in other major European countries.

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