Former Inland Revenue employee David Michael Hughes, known as Mike Hughes, 55, from Kent, was jailed for nine-and-a-half years in August 2018.
He was co-director of Keepers accountancy and taxation practice based in Rochester. But while posing as a legitimate payroll service provider, he led a financial conspiracy using a web of bank accounts, plus UK and offshore companies to steal millions in taxes from his clients.
The money paid by clients and deducted from workers’ wages, should have been paid to HM Revenue & Customs (HMRC). Instead, it was split between Hughes and his co-conspirators.
At Southwark Crown Court on Monday (14th June 2021), Hughes was ordered to pay £1.7m within three months or face a further four years in jail and still owe the money. A Serious Crime Prevention Order (SCPO) will be issued against Hughes for three years when he leaves prison, which will require him to comply with specific terms and conditions relating to his finances. If he breaches the order, he could be prosecuted and jailed.
Susie White, operational lead in HMRC’s Fraud Investigation Service, said: “Hughes abused a system which is supposed to ensure workers are paid correctly and taxes go to HMRC – instead he pocketed millions. If he doesn’t pay this confiscation order, Hughes, who is currently in prison, will stay there even longer and still owe the money.
“Our actions don’t stop once someone is convicted, we will look to reclaim the stolen money. If you know of anyone who is committing tax fraud, you can report them to HMRC online, or call our Fraud Hotline on 0800 788 887.”
Hughes left the UK in September 2011 and travelled to Chile and Dubai before living in Northern Cyprus, which does not have an extradition treaty with the UK. He was arrested by HMRC investigators at Heathrow Airport in January 2018 when he arrived on a flight from Istanbul, Turkey.
At Southwark Crown Court in August 2018, Hughes was convicted of three counts of conspiracy to cheat the public revenue, two counts of false accounting and providing false information, and one count of money laundering. He was jailed for nine-and-a-half years. Three other men were jailed for a total of 19 years in October 2016. They were: Aquil Ahmed, 60, an accountant; Victor Shearer, 43, a construction services company director; and Christopher Azzopardi, 37, a payroll administrator employed by Ahmed.
HMRC has already secured confiscation orders totalling £3.5m in January 2018 from two of his co-conspirators.
HMRC and the National Crime Agency (NCA) say that they are aware of the threat of payroll scams operating in the UK and remind businesses to ensure that they carry out ‘due diligence’ checks before appointing a payroll company to act on their behalf.