Fife businessman jailed over £500k tax fraud

John Fleming, boss of Anstruther based ICS Fisheries Ltd, illegally obtained almost £500,000 from the taxman over six years in a scheme that saw him “completely fabricate” invoices from a haulage company – allowing him to reclaim VAT on expenses his business had never actually incurred.

Dundee Sheriff Court heard that Fleming had carried out the fraud between May 2007 and July 2013, sending in false VAT repayment claims in the name of his company over the six years, leading him to receive huge payments.

He was caught out when an HMRC VAT inspector spotted differences between the invoices Fleming claimed to have paid to haulage firm G and J Wilson and the invoices issued by the company.

And when representatives of G and J Wilson 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 the court: “The business owned by the accused is involved in the sale of fish, which is zero rated for VAT.”

That meant that Fleming could claim back any VAT incurred by him in the expenses involved in the sale of this fish.

Ms Robertson continued: “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.”

Fleming’s lawyer told the court this week that he had managed to pay back the cash in full by selling property he owned - but a sheriff said the scam was too serious for him to avoid jail.

Defence solicitor David Bell said: “It appears the haulage company were not charging VAT and he was assuming it was included and was claiming it back.

“He then realised they were not adding VAT and he spotted the loophole and then exploited it over a lengthy period.

“He employs six people in the business and fears it will fold without him as he is heavily involved.”

Sheriff Alastair Carmichael jailed Fleming for two years and eight months, commenting: “I’ve come to the conclusion that because of the seriousness of nature of this offence – a fraud over six years of £489,000 – there’s no alternative to a custodial sentence.

“This was a fraud carried out by you on public funds, so it was a fraud on the whole community.

Speaking after the case Denis Kerr, assistant director of HMRC’s Fraud Investigation Service, said: “When we pay tax, we expect it to go towards paying for vital public services, not to line the pockets of unscrupulous traders. Fleming knew he was breaking the law but thought he could get away with ripping off honest taxpayers.

He added: “HMRC is levelling the playing field for businesses, investing more time and effort than ever into tracking down those who are stealing public money. Tax fraud is a serious crime and I ask anyone with information about those who may be involved to contact our 24 hour hotline on 0800 59 5000.”