Fisheries boss fabricated invoices in £500k fraud

John Fleming (59) boss of Anstruther based ICS Fisheries Ltd, ran the scheme over the course of six years that saw him “completely fabricate” invoices from a haulage company - allowing him to reclaim VAT on expenses his business had never actually incurred.

As a result he pocketed £489,341 - but when confronted denied the “unrealistic” and “exorbitant” claims were a fraud and insisted they were genuine.

But when unsuspecting bosses at the haulage firm, whose invoices he had forged, were interviewed they told HMRC investigators that the amount of cash Fleming claimed he was paying them was far more than they received from any customer.

Fiscal depute Eilidh Robertson told Dundee Sheriff Court: “The business owned by the accused is involved in the sale of fish, which is zero rated for VAT.

“As a result, the accused is lawfully entitled to claim back any VAT incurred by him in the expenses involved in the sale of this fish.

“The accused would submit invoices for expenditure incurred to his accountant who would then prepare a VAT return on his behalf and submit this to HMRC.

“The accused told his accountant that he was paying these invoices in cash hence there was no evidence from his business bank account which would either prove or disprove that the invoices were being paid or that the transactions contained within were legitimate.

She continued: “As a result of the ever increasing level of VAT repayments being requested by ICS, a compliance visit was undertaken by HMRC in December 2012.

“The officer noted a high level of haulage costs for the business being attributed to one particular supplier, G and J Wilson.

“Further enquiries were carried out and these uncovered a substantial discrepancy in the input tax being claimed by ICS versus the output tax being declared by G and J Wilson.

The court heard the style, layout and format of the invoices were different to that issued by G and J Wilson but when interviewed by police, Fleming claimed the invoices were legitimate.

Ms Robertson said: “One particular transaction was put to him where he had claimed input VAT of £53,000 for haulage costs against a purchase of £80,000 of fish but he insisted that the transaction was genuine and that he had paid this in cash.

“All invoices showed exorbitant levels of haulage costs being claimed by him against his alleged purchase of huge quantities of fish.

She added: “One of the company directors told HMRC when shown an invoice allegedly pertaining to a single transaction that ‘the figures are astronomical and unrealistic, this would involve trade for more than our company does for any single customer in a month’.

“The accused’s computer was later analysed and it was uncovered that these false invoices had in fact been created by the accused on it before he had submitted the them on to his accountants and induced them to make the false claim on his behalf.”

Fleming, of Balmullo pleaded guilty on indictment to a charge under the Value Added Tax Act committed between May 2007 and July 2013.

Defence solicitor David Bell said: “He has made repayments of the amount and there is a balance of approximately £93,000 outstanding.

“That may be paid shortly as there are means of obtaining and raising that further funding.

“I appreciate and he is very much aware that a custodial disposal will be very much considered.”

Sheriff Alastair Carmichael deferred sentence until next month for social work background reports and released Fleming on bail meantime.