Leicester rag trade £1.3m tax fraudsters handed jail terms

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The directors of a Leicester clothing company that supplied high street and online retailers have been jailed for a £1.3m tax fraud.

Hifzurrehman Patel, 40, and Ehsan-Ul-Haque Dawood Patel, 46, set up a sophisticated network of front companies to evade VAT between 2014 and 2017.

They were caught after a specialist rag trade taskforce made an unannounced visit to their Midlands Trading Ltd factory in December 2015.

The taskforce, which included officers from HMRC, became suspicious when staff clock cards completely disappeared during a tour of the factory while the business also handed over false invoices.

Investigators discovered the pair had been diverting VAT liabilities to a string of front companies, by claiming they produced clothes on their behalf.

It meant they evaded paying £1.3m of VAT on the clothes they were in fact producing themselves and selling on to unsuspecting high street and online retailers.

The pair were jailed for a total of nearly nine years at Leicester Crown Court on 17 May 2024. Hifzurrehman Patel of Evington Parks Road, Leicester, was sentenced to five years in prison having been convicted of conspiracy to evade VAT, contrary to section 1(1) of the Criminal Law Act (1977), and two counts of

 link source - East Midlands Business Link General https://www.eastmidlandsbusinesslink.co.uk/mag/wp-content/uploads/2024/05/Screenshot-2024-05-21-at-14.31.13.png

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