A business lady in Northern Ireland found that there was no hiding place when her address was raided by HM Revenue & Customs. In February 2012 Donna Magee was found in a cupboard when her premises were raided and false VAT invoices, bank statements and computer records were found that had used to reclaim VAT amounting to £140,749 on costs she had never incurred.
An HMRC spokesman said: ‘As a book-keeper Magee knew full well she was breaking the law, yet chose to overlook it for the opportunity of what she wrongly assumed would be easy money, at the expense of the taxpayer. She manipulated a system that exists for the benefit of legitimate companies with the sole purpose of lining her own pockets.’
Magee pleaded guilty to nine counts of dishonestly making false representation with the intention of making a gain in relation to VAT repayment claims under the Fraud Act. She has been sentenced to nine months in prison and nine months on licence.
Things do not always go in HMRC’s favour, however. Earlier this year two businessmen appealed against penalties in excess of £1.5m by HMRC who claimed that they had taken part in a VAT “carousel” fraud, in which a number of transactions take place resulting in VAT on purchases being reclaimed by a business without that VAT being initially paid over by the supplier. This particular case companies owned by the businessmen purchased irrigation hose that was manufactured by another company owned by them, and then resold to a third company in the United Arab Emirates which they also owned.
On the face of it, this is a typical set up for a carousel fraud, and HMRC imposed penalties accordingly. However, the tribunal overturned the penalties as it was shown that the businessmen involved had been kidnapped by associates of the real perpetrator, dressed as uniformed HMRC officers, and had been both beaten and threatened with guns.
Perhaps HMRC should have taken this into account in the first instance!