Tax & admin · 16 November 2018

HMRC catches VAT fraudster who set up fake companies in £120,000 scam

VAT fake company
The small business owner claimed £118,218 in fraudulent repayments

A London grocer who used fake companies to claim almost £120,000 in VAT repayments has been sentenced by HMRC.

Alaina Imponge, a grocer from Holloway, North London, registered seven companies for VAT between 30 March 2011 and 28 April 2014 and made 85 claims to the tax office.

Having been alerted by the fact that most of Imponge’s VAT returns were repayment claims, HMRC officers began investigating his companies.

They discovered that the majority of Imponge’s companies did very little business, while two had never traded at all. Only A & B Grocery Ltd in Holloway Road appeared legitimate. Other companies set up by the grocer included a used car business, a jewellery shop and a holiday villas firm.

How did he do it?

Imponge faked invoices in the name of his different companies to “hugely inflate” his expenses, according to HMRC, and claim VAT repayments.

Read more HMRC content:

Of the £125,743 repaid to the seven companies, £118,218 was found to be fraudulent.

What is invoice fraud?

Imponge’s VAT scam attempted to defraud the tax office, but the threat of invoice fraud to micro business owners is increasing.

False invoices could be submitted by third parties impersonating genuine suppliers, or even employees in some cases, in an attempt to deceive firms into making payments to fraudulent accounts.

Procurement fraud costs UK businesses £121.4bn every year, and fraudsters are becoming increasingly sophisticated. We asked two experts what tactics business owners need to be aware of.

Imponge pleaded guilty to being knowingly concerned in the fraudulent evasion of VAT in order to make monetary gain at Southwark Crown Court on 10 October 2018. He was jailed for three years at the same court this week.

Commenting on the case, Daren Cooley, assistant director at HMRC’s Fraud Investigation Service, said: “Imponge deliberately stole money which should be used to fund our public services, to prop up his grocery business and his personal lifestyle. He pocketed money equivalent to the salary of four new nurses in London.

“We will continue to pursue criminals who think it is acceptable to charge their customers VAT and pocket the money for their own benefit. Anyone with information about tax fraud should report it to HMRC online or contact our Fraud Hotline on 0800 788 887.”

HMRC comes down hard on small business scams

Imponge has become the latest small trader to face jail time after forging fake invoices.

A separate investigation by HMRC recently revealed that a clothing wholesaler from Rochdale had created templates from legitimate supplier invoices, which he then used to create fake sales and purchase documents.

After claiming almost £120,000 in repayments, the trader received a two-year suspended jail sentence, 150 hours community service and a compensation order of £70,271.

Meanwhile, a pair of London-based brothers were jailed last week for more than 12 years after evading £3.6m in tax by distributing smuggled alcohol.

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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