Bosses of Midlands textile firm dodged £1.3 million in tax and spent it on cars and property

Ehsan-Ul-Haque Dawood Patel and Hifzurrehman Patel
Ehsan-Ul-Haque Dawood Patel and Hifzurrehman Patel -Credit:HMRC

Bosses of a Midlands textile firm that set up fake sub-contractors to avoid paying £1.3 million in tax have been locked up. Ehsan-Ul-Haque Dawood Patel and Hifzurrehman Patel crafted fake invoices from bogus companies so they would not be liable for VAT.

The fraudsters then splashed their ill-gotten gains on cars and property. The scammers set up Midlands Trading Ltd in 2014, with HMRC first becoming suspicious of the firm's activity the following year. An unannounced inspection at the factory in Benson Street, Spinney Hills, Leicester, then took place in 2015.

A specialist taskforce spotted workers' clocking-in cards had 'completely disappeared' during their visit. The business also handed over fake invoices, LeicestershireLive reports.

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It was established that they had set up a sophisticated network of front companies to evade VAT. They claimed clothes were made elsewhere when they were in fact producing the clothes themselves and selling them on to unsuspecting retailers including Boohoo, Primark and New Look. There is no suggestion these companies did anything wrong or were aware of the fraud.

Hifzurrehman was convicted by jurors at Leicester Crown Court of conspiracy to evade VAT and two counts of money laundering.

The 40-year-old - of Evington Parks Road, Evington , Leicester - was jailed for five years on Friday, May 17. Ehsan, 46, and of Uppingham Road, Leicester, was jailed for 47 months after admitting the same three charges.

Mark Robinson, of HMRC’s Fraud Investigation Service, said: "Hifzurrehman and Ehsan carried out a relentless and sustained attack on the tax system. They invented contracts and forged documents to evade VAT.

"This is money that should have been helping to fund our public services and was instead spent on cars and property. Tax fraud is not a victimless crime.

"It has real consequences for the public services we all rely on and we are working hard to ensure tax cheats do not gain an unfair advantage over their law-abiding competitors." A third man, Pravinbhai Valland, admitted conspiracy to evade VAT.

The 54-year-old - of Roberts Road, Belgrave, Leicester - was handed a 24-month sentence, suspended for two years. He will have to carry out 300 hours of unpaid work and was made subject to a three-month curfew.

The Crown Prosecution Service intends to confiscate any goods or assets bought using money gained through offending.