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Payroll scammer jailed for £7m construction tax fraud

A former tax consultant who masterminded the theft of millions from the pay packets of construction workers has been jailed for nine-and-a-half years.

David Michael Hughes, 52, used his tax consultancy to run a fraudulent payroll scheme that stole £6.9m from workers’ wages and taxes paid by clients.

He was jailed for nine-and-a-half years for conspiracy to cheat the public revenue – three-and-a-half years for false accounting and six for money laundering, with the sentences running concurrently.

Mr Hughes (pictured) and his co-conspirator Aquil Ahmed used more than 10 UK and offshore companies to carry out the fraud and money laundering.

Both Mr Hughes and Mr Ahmed were co-directors of the ‘Keepers’ accountancy and tax companies, which were all registered to Rochester, Kent.

The pair employed Christopher Azzopardi to operate a payroll services firm for clients through various Keepers companies.

The firms were supposed to calculate wages for clients and pay tax on this due to the HMRC through PAYE and the Construction Industry Scheme.

Clients were charged VAT on these services, but this was never paid to HMRC by the Keepers companies.

The companies also ran a payroll scheme for Leaner Logistics Ltd, a construction services firm run by Victor Shearer. Mr Shearer introduced other clients to the scam.

Under the scheme, construction workers thought their taxes were being paid to the HMRC through the payroll, but they were in fact going straight to those behind the fraud.

Mr Hughes, Mr Shearer and Mr Ahmed funnelled the money through banks in the Channel Islands, the UAE, the US and Turkey, as well as carrying out a number of property transactions.

The stolen money was used by Mr Hughes to set up a new life abroad in northern Cyprus, a country which does not have an extradition treaty with the UK.

Mr Shearer had laundered £1.2m through a Gibraltar bank account to buy property, and pay for holidays for family and friends, while Mr Ahmed bought properties in the UK, US and Turkey and took multiple holidays to places such as Dubai and Monaco.

Mr Hughes was convicted of three counts of conspiracy to cheat the public revenue, two counts of false accounting and furnishing false information, and one count of money laundering at the Southwark Crown Court on Wednesday. 

He has also been banned from being a company director for 12 years.

DCL Etherington QC said he had committed a “deliberate, calculated fraud that was brazen and bold from the outset”.

In June 2016 Mr Ahmed admitted conspiracy to cheat the public revenue and was later sentenced to seven years and eight months in jail and disqualified from being a director for 10 years.

Mr Shearer was convicted of conspiracy to cheat the public revenue and money laundering in July 2016. He was jailed for seven-and-a-half years in October 2016 and disqualified from being a director for 10 years.

The HMRC secured confiscation orders totalling £3.5m against Mr Ahmed and Mr Shearer in January 2018. It will also seek to recover money from Mr Hughes.

Christopher Azzopardi was convicted of conspiracy to cheat the public in July 2016 and jailed for four years in October 2016.

HMRC fraud investigation service assistant director Alison Chipperton said: “Mr Hughes and his criminal fraternity were driven by greed, abusing systems that are designed to ensure workers are paid correctly and taxes paid to HMRC.

“Hughes deliberately fled the UK and moved to a country without a UK extradition treaty in an attempt to evade justice. He was arrested as soon as he returned to the UK, and is now paying the price for his crimes.

“They were all professionals who broke the law, but as a tax consultant and former Inland Revenue employee, Hughes’ role as the criminal mastermind is even more deplorable. Tax evasion isn’t a victimless crime, it is theft from public services used by us all.”

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