A businessman who funded a fantasy lifestyle by stealing from the public purse has had three businesses wound-up and been jailed for four years. An HMRC investigation revealed that Richard Williams and his partner Laurel Howarth evaded £1million in VAT payments by falsifying sales records at three separate companies. They then spent the proceeds on building a replica German Second World War submarine.
The duo were given Das Boot by Manchester Crown Court after submitting fake invoices reclaiming VAT on specialist disability beds over a five-year period between 2005 and 2010.
Cheating the public purse
The court heard how Williams claimed back £345,549 after creating false VAT returns and fraudulent invoices over an 11-month period for a company called Sleepability. He then employed the same scam at a second firm, Ortho-matic, this time wrongfully claiming £416,700. It was three times a charm for Williams, who also claimed £257,255 from the Discount Mobility Store in Workington, Cumbria.
All three of the businesses purportedly sold disability equipment including adapted beds, but in reality there was no substance to the businesses whatsoever. They had been created with one sole purpose – to submit false invoices to HMRC with a view to dishonestly reclaiming the VAT. By the time the five-year long scam was brought to an end, the pair had claimed a total of £1,017,505 in VAT repayments.
Behaving stupidly and recklessly
In court, Williams’ barrister described how the defendant had spent the money on “a dissipated and nomadic lifestyle – travelling around marinas, buying boats, drinking champagne and generally behaving stupidly and recklessly.”
This included £50,000 spent on converting a narrow canal boat into a replica German submarine, complete with a periscope and torpedo tubes. In one photograph, Mr Williams is seen posing proudly on top of his boat in a replica German naval uniform.
He also paid for a private jet to take him and his wife to Paris to buy bespoke wallpaper, and spent even more of his ill-gotten gains transforming their home in Blackpool, Lancashire, into a mock-up of the Oval Office in the White House.
VAT inspectors raided the ‘submarine’
During the trial it emerged that as part of the HMRC investigation, VAT inspectors raided Mr Williams’ ‘submarine’ when it was moored near the Royal Armouries in London.
Facing insurmountable evidence, Williams pleaded guilty to four counts of defrauding HMRC and received a four year and eight month custodial sentence. His partner, Laurel Howarth, pleaded guilty to submitting VAT while being reckless as to whether they were false (wrongful trading). She received a 20 month jail term for her part in the scam.
Speaking during the case, the judge told Williams: “This was serious offending. It was carefully thought out, organised and planned over a long period of time. All the indications are that the money was squandered.”
HMRC criminal investigation policy
HMRC deals with the majority of cases of fraud through the use of the more cost effective civil investigation procedures under Code of Practice 9. However, in cases where HMRC feels it needs to send a strong deterrent message, or where the conduct involved is such that only a more severe sanction will do, it will launch a criminal investigation.
Examples of the kind of cases in which HMRC will consider a criminal, rather than a civil conviction, include:
- VAT ‘bogus’ registration repayment fraud
- Organised tax credit fraud
- Cases where organised criminal gangs attack the tax system
- Where an individual holds a position of trust
- Where false statements or false documents are provided during the course of a civil investigation
- Where deliberate concealment, deception, conspiracy or corruption is suspected
- In cases involving money laundering which focus on advisors, accountants or solicitors acting in a ‘professional capacity’
- Where the perpetrator has committed previous offences
- In cases involving theft, or the misuse or unlawful destruction of HMRC documents
You can read more about HMRC’s criminal investigation’s procedure here.
If you have concerns about HMRC Vat or other tax arrears and your ability to pay them call 0800 074 6757 and ask for free advice.