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Payroll fraudster jailed for 17 years

12th Jul 2012
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A construction industry fraudster from Solihull who conned HMRC out of £34m through a payroll scam has been jailed for 17 years.

Thomas Scragg was found guilty by West Midlands Police and HMRC for three separate fraud convictions, which resulted in one of the longest sentences of its kind in the UK.

Scragg used his company Moya Payroll to oversee the wages of employees working for organisations in construction, allowing him to embezzle more than £26m in tax between 2002 and 2007.

The Chartered Institute of Payroll Professionals (CIPP) condemned the fraud and highlighted the importance of having the right security and control processes in place.

Diana Bruce, senior policy liaison officer at the CIPP, said: “Unfortunately payroll is a high risk area of any business and employers and managers must continually evaluate the ways in which the risk of fraud can be mitigated.

“With the increase in sophisticated technology it should be easier to have protected audit controls and checks in place, however this technology, the Internet for example, can also be used to manipulate and misuse employer and employee data for criminal activities.”

The extent of Scragg’s scheme remained a secret until now as cases against his associates, Carl and Anthony Johnson, progressed through court.

However the convictions for money laundering Scragg’s gains mean reporting restrictions have now been lifted on the HMRC investigation.

Birmingham Crown Court heard how they lived extravagant lifestyles using around £2.4m they received from Scragg in return for their “protection”.

They claimed their wealth came from running a legitimate security business called Unit 11, however the company paid nothing in tax to HMRC.

Their assets, including properties worth more than £2m, are now the subject of confiscation proceedings.

Scragg’s continued the fraud in various guises even after he knew he was being investigated. His co-conspirators Mark Harris, Mark Kenny and Sital Sheamar were charged and jailed with conspiracy to defraud, conspiracy to pervert the course of justice and money laundering after they tried to release the equity in the fraudulent company.

Moya Payroll was used as a vehicle to steal more than £26m in tax, while a further investigation by the West Midlands Police uncovered a further £8m of stolen PAYE between April 2007 and February 2008.

Scragg’s co-defendant, Paul Phillips, was jailed for nine years.

Simon De Kayne, assistant director of criminal investigation at HMRC, said: “This operation is a result of strenuous efforts by our teams of officers, working closely with West Midlands Police, to disrupt the sophisticated scams of organised crime gangs behind fraud and money laundering activities.

* * *

In a bumper week for Revenue prosecutors, a Hertfordshire man was sentenced to 15 months in prison for evading more than £400,000 in income tax and national insurance over an 11-year period.

The 49-year-old had formed a railway planning consultancy called Kallbond in 1992, but never paid tax on earnings that amounted to more than £1m.

The total amount of tax due, plus interest, was £401,764.34. He pleaded guilty at Blackfriars Crown Court on 30 May 2012 to one charge of fraud by false representation and two counts of cheating the public revenue.

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Replies (4)

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By Mouse007
13th Jul 2012 13:14

"Thomas Scragg was found guilty by West Midlands Police and HMRC

How did they manage that? I thought it was the job of the Court to find people guilty.

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David Winch
By David Winch
13th Jul 2012 13:24

Joining in to a bit of Friday lunchtime pedantry, might I point out that in England judges do not have gavels.  So, Mouse007, your animation is in error!

David

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By Mouse007
13th Jul 2012 14:40

Don't they?

Thanks, now I know what to buy them for Christmas

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David Winch
By David Winch
13th Jul 2012 18:15

The 17 year sentence

I understand that the 17 year sentence in this case is made up of three separate consecutive sentences for separate offences.  The most recent sentence was actually one of 4 years, but by that time Mr Scragg was already serving sentences of 13 years in total in respect of previous convictions.  More information on the sentencing is HERE.

David

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