Scunthorpe

Scunthorpe businessman jailed for £150k VAT fraud

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A businessman dodged paying thousands of pounds VAT in a desperate attempt to save his company, Lincoln Crown Court was told today (Monday, August 1).

Richard Hotchin’s company faced cash flow issues from problems that arose over payments for a major contract.

Hotchin used fake invoices to falsely reclaim VAT as part of a £147,000 tax fraud only to be caught out following a VAT inspection.

Hotchin, 39, of Messingham Road, Scotter, who at the time was the sole director of Scunthorpe-based Qube Specialist Maintenance Solutions Ltd, admitted a charge of cheating the public revenue between April 30, 2012 and March 19, 2014. He was jailed for 21 months.

Judge John Pini QC, passing sentence, told Hotchin “This was a deliberate fraud albeit with a view to keeping Qube afloat.

“I entirely accept that this has been a personal catastrophe for you. You have lost your good name and your business reputation and I totally understand the very profound sense of shame you feel.”

Ian Way, prosecuting, said “He created false accounts records, provided false documents and submitted false VAT returns. He did go to some lengths to evade his VAT liabilities. The motivation for evading VAT and submitting false invoices was cash flow.”

Mr Way said that Hotchin submitted false returns to HMRC for three different VAT quarters and paid the amounts due according to the forms.

The prosecutor added: “It is the prosecution case that these three VAT returns were fundamentally false in that they intentionally misrepresented the due amounts owed to HMRC relying on false invoices to reduce liability.”

Hotchin used the VAT from two false invoices to offset £101,800 against the amount of VAT he should have paid.

An investigation revealed that neither of the suppliers involved had ever traded with Qube and that the invoices used were fake. Hotchin also failed to pay a £45,600 VAT bill which arose out of a change in the accounting system used by the company.

Nick Johnson QC, in mitigation, said that Hotchin had always intended to repay the tax.

He told the court: “The reason behind this was to try to deal with an acute cash flow problem. This was a far from sophisticated attempt to evade liability. It was very easily uncovered. He always intended eventually to comply with his VAT liabilities.”

Mr Johnson said the company’s problems arose after it won a major contract which in hindsight was too big for the firm to deal with resulting in cash flow problems and ultimately leading to the liquidation of the company in December 2015.

“He suffers from Multiple Sclerosis and has done for nine years. None of the £147,000 has been repaid because he has not been able to. His own personal finances are in disarray. Since this he has not been able to work.”