Details of the case have been released by HMRC and it initially revolved around the five directors suspected of evading Corporation Tax on profits from sales of waste paper bi-product to a local recycling company. The directors of the recycling company were arrested during the investigation but they were not charged and actions were not proceeded with.
The print firm directors were: Stephen Knight, 67, John Knight, 74, Brian Thomas, 70, Paul Murphy, 57, and Philip Sach, 53.
All played a part in a complex eight-year fraud that was uncovered following an investigation by HM Revenue and Customs (HMRC).
HMRC noted that “The five were all directors of collapsed Basildon-based large printing business Anton Group Ltd. Some of the directors conspired to keep cash sales of waste paper ‘off record’, whilst they all shared the proceeds, cheating the public purse out of £3.1m in Corporation Tax, Income Tax, VAT and National Insurance Contributions (NIC).
“During the fraud, the directors slashed staff pay – including their own – telling employees that this would assist with cash flow and keep the business afloat. However, while it appeared they had each forfeited £5,000 of their own pay per month, the Knights, Thomas, Murphy and Sach were covertly stealing huge amounts of taxpayer money to line their own pockets.
“Alongside non-taxed off record payments, the five received significant payments from the Anton Group Ltd, separate from any legitimate forms of payment.”
HMRC explained that initial investigations focused on suspected evasion of Corporation Tax due on profits from sales of waste paper bi-product to a local recycling company.
HMRC officers were told that the paper was given to the recycling company free of charge, in exchange for the installation and upkeep of machinery. But, investigators found that money did change hands and the Anton Group Ltd received cash payments for the waste paper.
“This was a high value and complex fraud involving a group of callous fraudsters.”
These cash payments, explained HMRC, were controlled by chief executive officer John Knight and production director Stephen Knight, who facilitated regular ‘off record’ payments to directors and employees between April 2004 and November 2012.
Around 90 fake invoices, amounting to approximately £1.4m, were also discovered in the company’s accounts. These had been declared as payments to suppliers, but the funds were siphoned off into the directors’ personal bank accounts and used to repay directors’ loans owed to the company.
Adam Kingsgate, Assistant Director, Fraud Investigation Service, HMRC, said: “This was a high value and complex fraud involving a group of callous fraudsters who had no care for the impact of their crimes on others. They were complicit in almost running the business into the ground and leaving hundreds of people without jobs.
“HMRC is committed to taking action all those who steal from the public purse. Fraudsters who use sophisticated methods to hide their criminal proceeds should know that we are more than a match for them. No tax evader is beyond our reach.
“If you know of anyone committing any type of tax fraud, you can report them to HMRC online or call our Fraud Hotline on 0800 788 887.”
Last Friday, 31 January, at Southwark Crown Court, the group were sentenced for their roles in the fraud.
· John Knight of Glebe Road, Ramsden Bellhouse: Three years in prison. Disqualified as a director for seven years.
· Stephen Knight Perry Street, Billericay: 28 months in prison. Disqualified as a director for five years.
· Brian Thomas Newton Road, Sporle: 28 months in prison. Disqualified as a director for four years.
· Paul Murphy Spring Elms Lane, Little Baddow: Two years in prison, suspended for two years. Disqualified as a director for three years.
· Phillip Sach The Lintons, Chelmsford: Ten months in prison, suspended for 12 months.
HMRC is pursuing confiscation action to recover the stolen money.