Primark suppliers jailed for ‘relentless’ £1.3m VAT fraud

Primark suppliers jailed for ‘relentless’ £1.3m VAT fraud

May 23, 2024

Two directors of a Leicester clothing company have been jailed after a rag trade taskforce made a surprise visit to their factory

Hifzurrehman Patel, 40, and Ehsan-Ul-Haque Dawood Patel, 46, were running a clothing factory, selling to huge high street chains such as Primark, Newlook, BooHoo and Misguided. None of the companies had anything to do with or knew about the fraud.

The pair set up a ‘sophisticated network of front companies to evade VAT between 2014 and 2017’, said HMRC. These companies were set up to divert VAT liabilities and claim the clothes were being made for them by the front companies.

In reality, the clothes were being produced in a factory they owned in Leicester, evading a total of £1.3m in VAT.

During the surprise visit from the task force, which included officers from HMRC, the clocking-in cards from staff disappeared and the Patels gave them fake invoices during their tour of the factory in the Midlands.

Hifzurrehman Patel was sentenced to five years in prison for two counts of money laundering and one count of conspiracy to evade VAT. Ehsan-Ul-Haque was sentenced to three years and 11 months in prison for the same charges.

Mark Robinson, operational lead in HMRC’s fraud investigation service, said: ‘Hifzurrehman and Ehsan Patel 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.’

Paula Lloyd, specialist prosecutor in the Crown Prosecution Service, said: ‘While other businesses were doing the right thing by paying their taxes, these criminals thought they could enjoy a cushy lifestyle paid for by hardworking taxpayers.

‘The CPS will be taking them back to court to confiscate any goods or assets they bought using money from their offending.

‘We are determined to ensure tax dodgers face the full consequences and hopefully this will make others think twice before they do the same.’

As well as the two main perpetrators, Pravinbhai Purshotam Valland was also charged with conspiracy to evade VAT, receiving a 24-month sentence, suspended for two years, as well as 300 hours of unpaid work and a three-month curfew.