3 Men Jailed For Fraudulent R&D Tax Credits Claim

1st Dec 2020
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As orignally reported on My News Desk last week.

The case

Three men have been jailed for a combined total of 21 years after trying to claim £29.5 million in R&D tax relief. The claim was made in relation to a fictitious IT project.

Matthew Sutherland, 44, of Leamington Spa, Mohammed Zeb Zaheer, 37, and Mohammed Iqbal Khan, 53, both of Coventry, were last week prosecuted for Research and Development (R&D) tax relief fraud.

Sutherland was apparently the mastermind of the crime and used his company, Convergica (Clinical Information Systems) Ltd, to try and claim tax relief of £29.5m against an alleged £137 million spend on developing an IT healthcare system for two countries in the Middle East.

Zaheer and Khan were apparently frontmen for companies used to carry out the fraud, which came to light when HM Revenue and Customs (HMRC) requested the supporting documents for the claim.

A falsified bank statement was then submitted in January 2016, prompting an investigation. Sutherland and Khan were arrested and all three men were charged with fraud in March 2018.

Sutherland's business, Convergica Ltd claimed to have outsourced the programming work for the IT system to Mediatronix Ltd, a company controlled by Khan, which was supposedly paid more than £137 million by Everbright Financial XII Ltd, controlled by Zaheer, on Convergica’s behalf.

However, this payment was not made and the claim for R&D was fraudulent and was not paid out by HMRC.

The men pleaded not guilty to conspiracy to cheat the public revenue at Birmingham Crown Court on 12 September 2018. They were found guilty at the same court on 26 February after an eleven week trial.

At Birmingham Crown Court last week, 26 November 2020, Sutherland was jailed for nine years, Khan was jailed for seven years and Zaheer was jailed for five years. Sutherland was jailed in his absence as he is in Dubai and is too ill to travel.

Kath Doyle, Deputy Director, Fraud Investigation Service, HMRC, said: “These men tried to extract an astronomical sum of money by claiming tax relief from a scheme designed to help legitimate companies do work that seeks to make advances in science and technology.

“This wasn’t research and development, it was out and out fraud. HMRC will continue to create a level playing field for law abiding businesses by rooting out the minority who seek to abuse these schemes, as this result clearly shows.

“Anyone with information about any type of tax fraud can report it to HMRC online or call our Fraud Hotline on 0800 788 887.”

Information about any type of tax fraud can be reported to HMRC on 0800 788 887 or online at https://www.gov.uk/report-an-unregistered-trader-or-business.

Further risks

This case serves as yet another reminder that accountants and advisers need to ensure they perform thier due diligence when advising and taking on clients for R&D tax relief claims. Poor advice can arouse suspicion from HMRC, leading to further questions on a claim. 

Acting in a reputable, competent manner is in the interests of all, as it can help reduce fraudulent applications that could threaten the future of R&D funding.