Former Owner Of BHS Has Been Jailed For 6 Years For Tax Fraud

Former Owner Of BHS Has Been Jailed For 6 Years For Tax Fraud

The former owner of BHS, Dominic Chappell, has been sentenced to 6 years in prison for tax evasion.

He was found guilty by a jury at Southwark Crown Court of failing to pay tax on £2.2 million of income totalling £584,000 after buying BHS for £1.

Chappell, 53, enjoyed a lavish lifestyle buying yachts, a Bentley car and luxury holidays.

BHS had a pension problem in 2015 that left Chappell “utterly broke”, claimed his lawyer.

Mr Chappell had bought the BHS franchise from Sir Phillip Green that year but the chain collapsed a year later which led to the loss of 11,000 jobs and a pension deficit of £571 million.

 

BHS Problems

Chappell’s consortium, Retail Acquisitions, bought BHS in 2015 but they was losing £1 million per week with masive pension deficits.

In his year of ownership Mr Chappell received £2.5m in payments from BHS , largely for consultancy fees provided by another of his companies, the bankrupt finance firm Swiss Rock Limited.

Sir Philip Green later agreed a £363 million cash settlement, after being criticised for agreeing to the deal, for the Pensions Regulator to plug the gap in the pension scheme.

The HMRC repeatedly tried to chase down the missing funds, but Chappell ignored their requests, at one point going on a skiing break before asking for more time to pay the money when he returned home.

In his defence, Chappell argued he was too busy resolving issues with BHS to deal with the outstanding taxes that were due.

He had denied three charges of tax fraud.

Chappell was ordered to pay £9.5m into BHS pension schemes this year, after losing an appeal.

And in 2019 the Government’s Insolvency Service banned him from running a company for 10 years, saying he had carried out “reckless financial transactions” and “failed to maintain adequate company records”.

Churchill Tax Successfully Defend Client Against Insolvency Service

Churchill Tax Successfully Defend Client Against Insolvency Service

Churchill Tax Advisers have recently assisted our client in defending himself against the Insolvency Service who were seeking his disqualification as a director. Working with the client we were able to demonstrate that his behaviour, which had been considered detrimental to the public good by the Insolvency Service, was actually that of a businessman seeking to save his company as the retail market he operated in changed due to Brexit and the tough economic conditions that many areas have experienced. We were able to show that his own losses from the winding up of his business were as great as those of others. The Insolvency Service when presented with all the circumstances took the decision to take no further action.

Churchill Tax’s Advice Saves Company Penalties

Churchill Tax’s Advice Saves Company Penalties

Churchill Tax Advisers have successfully assisted a medical clinic that had been under investigation regarding the exemption of its supplies. HMRC believed that the supplies being made were taxable at the STANDARD RATE. Working with our client we were able to demonstrate that the client’s work fell completely within the medical exemption as set out in the VAT legislation. We were also able to bring to HMRC’s attention, changes in case law which also favourably demonstrated our client’s position. The outcome was that our client maintained its system of charging and did not become twenty per cent more expensive in delivering its services.

Restaurant Owner Faces 7-years Behind Bars Or Pay £1.2million

Restaurant Owner Faces 7-years Behind Bars Or Pay £1.2million

A restaurant owner who laundered cash stolen by his VAT fraudster wife has been told he could face an extra seven-and-a-half years in jail if he does not pay £1.2 million.

Yong Hong Lu, 52, of Farnham, Surrey, was jailed for two years last May after HMRC investigation found he had laundered more than £1m.

His wife Huey Jun Khoo, 51, and business partner Jing Fu, 50, of Crondall, Hampshire, were sentenced for VAT fraud in May 2019, after they was found guilty of using an off-the-books card machine to pocket £180,000 in VAT.

Lu and Khoo used the stolen money from their four-year fraud to pay for designer clothes, holidays and school-fees.

Lu was jailed for two years, Khoo was jailed for three years and 9 months, and Fu was sentenced to seven months imprisonment, suspended for two years.

Lu must pay £1.2m within three months or face seven-and-a-half years longer in jail. Fu has three months to pay £50,000 and Khoo has been ordered to pay £15,000 within three months. If they fail to do so, they will be jailed for nine months respectively and still owe the money.

The VAT fraud and money laundering was discovered after a surprise visit from HMRC at the Bon East Chinese restaurant in 2015. Officers found two card reading machines – one linked to a business bank account and the other to a bank account which Khoo had opened in the name of one of the restaurant’s chefs.

Customer payments made into the ‘chef’ account were never declared to HMRC, to evade paying VAT.

After the HMRC visit, Khoo and Fu destroyed the business records in a failed bid to hide their crimes. Two documents which Khoo kept were later discovered at her home. Investigators also found £12,000 in cash hidden in a wardrobe in the couple’s home.

Khoo admitted evading VAT, money laundering and perverting the course of justice. Fu, admitted money laundering and perverting the course of justice. Lu was convicted of money laundering after a trial at Southwark Crown Court.

Restaurant Owner Faces 7-years Behind Bars Or Pay £1.2million

A Suspected Furlough Fraud Of £495,000 From A West Midlands Man

A West Midlands man has been arrested as part of an HMRC investigation into a suspected £495,000 Coronavirus Job Retention Scheme (CJRS) fraud.

HMRC officers executed a search warrant on 8th July and arrested the 57-year-old I the Solihull area. This is the first arrest in connection to alleged fraud relating to CJRS.

Computers and digital devices were seized, and funds held in a bank account relating to his business have been frozen.

More than £27.4 billion has been claimed through the Job Retention Scheme supporting 1.1m employers and 9.4m furloughed jobs.

The four lines of defence the CJRS scheme has are:

  • Employees have to have been on a payroll on or before 19 March – preventing the use of fake employees
  • Claims are only accepted from employers known – and authenticated – by HMRC
  • All claims are assessed by a specialist team within a 72-hour window
  • Proportionate and reasonable interventions with customers after money has been paid.

Eight more men from across the West Midlands have also been arrested as part of this linked investigation. Further computers and other digital devices were seized, plus business and personal records.

Furlough Fraud

Furlough Fraud

CJRS (Coronavirus Job Retention Scheme) and SEISS (Self-Employment Income Support Scheme) grants knowingly misused can be a charged as a criminal offence. If HMRC open an enquiry and do not prosecute, the Officers can pursue penalties up to 100% of the tax due. The tax due = 100% of the incorrect grant payments made. HMRC should be more lenient if there is a genuine mistake it is therefore important to obtain professional advice if there is an investigation or to make a voluntary disclosure of any errors before HMRC open an enquiry. HMRC made the first criminal CJRS fraud arrest in July and with over 4,000 reports from employees many employers could be caught up in an investigation. 

Following Royal Assent on 22 July, businesses have 90 days to come forward to make a voluntary disclosure to HMRC of any errors. The deadline for payments already received will expire on 20 October.