10 Sep Tax fraud restauranteur sent to jail
A Chinese restaurant owner has been found guilty of tax fraud and jailed for 20 months following an investigation by HMRC. The restauranteur, David Ying Chung Lai, fraudulently claimed more than £100,000 in VAT repayments.
HMRC were first tipped off about the fraud when they noticed that the forged invoices contained spelling mistakes. In March 2012, a HMRC compliance officer spotted a series of spelling errors on invoices that not only looked unprofessional, but were ‘remarkably’ similar to each other, despite purporting to be from different companies. The invoices appeared to show that Lai had spent over £700,000 on renovations to his two Newcastle city centre restaurants.
Diane Donnelly, Assistant Director, Fraud Investigation Service, HMRC, said:
'Lai bungled his way through this fraud until HMRC inevitably caught up with him. Today's sentence sends out a clear message to those who might be involved in this type of fraud: if you steal public money from honest, hard-working law-abiding people, we will prosecute you, and you will pay the consequences.'
We are told that HMRC discovered that one invoice, for electrical rewiring and the fitting of a new kitchen floor totalling £45,000, appeared to be from a legitimate company based at Mariner’s Wharf in Newcastle. Lai, however, had incorrectly copied the address as ‘Marines’ Wharf. On the forged letterhead, he had typed ‘Limtied’ instead of ‘Limited’. These schoolboy errors made the fraud far easier to spot.
The restaurant trade has historically had a reputation as a sector where there is a significant amount of tax leakage and has always provided a happy hunting ground for HMRC. Any restauranteurs who need to regularise their tax affairs should ensure that they make a voluntary disclosure of any errors before they are discovered by HMRC.