Two businessmen who lied to HM Revenue & Customs about £1.3m that they had hidden in offshore bank accounts have been jailed for tax evasion and fraud for a combined two years and three months.
Roderick Smith of Wigan was jailed for 15 months and his business partner Stephen Howarth of Cheshire was jailed for 12 months.
Mr Smith told HMRC that he had one offshore account when he was given the chance to come clean in an offshore disclosure campaign. He failed to mention 11 other accounts. Mr Howarth also failed to take the chance to disclose any of his accounts in the campaign, HMRC said.
The two men ran a company offering computer technology expertise to the car trade, with many customers based in Germany. But the pair did not register their true level of sales with HMRC and instead put their profits in bank accounts in the Isle of Man. Alerted by the German tax authorities, HMRC investigators discovered that, over a six-year period, the men evaded around £500,000 in UK income tax.
HMRC investigators identified sales totalling £1,255,615 in Germany, while the company the pair ran in Manchester, Goldlogic Control Systems Ltd, declared only £49,650 of this money in sales for the same period. The balance was siphoned off into the offshore accounts of five shell companies registered in Mauritius and the Isle of Man, created by the directors solely for the purpose of tax fraud.
Mike Preston, HMRC assistant director for criminal investigation, said: “Smith and Howarth stole from UK taxpayers, using the money that should have paid for public services to fund luxury lifestyles filled with prestige cars and expensive holidays.
“By failing to declare the true level of sales in Europe, and pay tax due on these earnings, they must now face the consequences of their actions in jail. HMRC is clamping down on tax evasion and targeting UK taxpayers using offshore accounts to disguise their wealth. I urge anyone with information about suspected tax fraud to call the HMRC Tax Evasion Hotline on 0800 788 887.”
Confiscation orders were issued under Proceeds of Crime legislation in respect of Mr Smith for £300,000 and Mr Howarth for £200,000. They must pay within 24 months or they will be jailed for a further 15 and 12 months respectively. Both men must pay £5,000 court costs. Mr Smith has already paid £40,000 under the OFD scheme.
