A gang which included a town councillor and a pensioner was jailed for a total of 19 years for evading an estimated £4.3m in duty and tax through a sophisticated fuel and VAT fraud, following an investigation by HM Revenue and Customs (HMRC).
Senior citizen Michael Wilmot, 72, from Market Rasen, Lincolnshire, was the organiser of the fraud. Using connections to a farmers’ buying consortium in Louth he ordered large quantities of rebated fuel, commonly known as red diesel. Unknown to the consortium, the fuel was sold on and used illegally in heavy goods vehicles (HGV) belonging to 35 different companies, all with connections to Wilmot.
Some of the HGVs had adapted fuel tanks fitted with anti-siphon devices to hide their illegal use of red diesel. During the investigation, HMRC officers discovered a factory where false fuel tanks were being manufactured and fitted to other lorries. It is estimated that around 1.5 million litres of rebated fuel was used illegally with an estimated duty loss of £672,000.
In an extension of the fraud, Wilmot and co-conspirator Tracie Morton issued invoices for the haulage work carried out by the companies, charging customers VAT on their services. But instead of paying the VAT to HMRC, they simply pocketed the cash. In addition, none of the companies involved paid Corporation Tax or PAYE and National Insurance for their drivers and employees. The total tax loss was estimated at over £3.7m.
Other gang members were town councillor David Strachan and transport manager Michael Taylor, both from Market Rasen, John Raithby, a company director from Waddingham, and Derek Blackburn, an HGV driver from Market Rasen.
Wilmot and Morton often set up the companies, many of which traded for a short period of time, using false directors’ names, including the details of two people that had died.
The gang were sentenced on Friday 11 July 2014 at York Crown Court by His Honour Judge Jackson who said: “This was a planned, persistent and sophisticated fraud. It is not a victimless crime but cheating affects all of us as taxpayers and I commend the officers for the work on the case.”
Wilmot was jailed for 4 years and 6 months for excise fraud and 7 years for conspiracy to cheat the revenue, with both sentences to run concurrently. He was also banned from being a company director for 10 years.
Morton was jailed for 3 years for excise duty fraud and 4 years and 6 months for conspiracy to cheat the revenue, with both sentences to run concurrently.
Strachan was jailed for 2 years and banned from being a company director for 10 years. Strachan was caught on CCTV transferring fuel into an HGV vehicle leased by one of the companies involved in the fraud which was later found to have red diesel in its tanks by HMRC officers.
Taylor was jailed for 3 years for excise fraud and 4 years for conspiracy to cheat the revenue, with both sentences to run concurrently.
Raithby pleaded guilty to evading payment of VAT and was jailed for 18 months, of which he will serve half.
Blackburn pleaded guilty at the start of the trial to conspiracy to fraudulently evade payment of excise duty on rebated fuels and conspiracy to cheat the revenue and will be sentenced at a later date.
Jo Tyler, assistant director, criminal investigation, HMRC said: “This criminal gang manipulated a system put in place for the legitimate use of red diesel, giving them an advantage over honest hauliers.
“They then charged their customers VAT which they kept instead of paying to HMRC. They knew that they were breaking the law, yet chose to overlook it for the opportunity of making what they wrongly assumed would be easy money at the expense of the UK taxpayer. They now have to pay for their criminal activities.
“I urge anyone with information about people or businesses involved in tax fraud to contact HMRC’s Tax Evasion hotline on 0800 788887.”