Leicester textile company executives jailed for £1.3m tax fraud

Midlands Trading Ltd was established in 2014. HMRC first became suspicious in 2015 during an unannounced inspection at their factory in Benson Street, Spinney Hills, Leicester.

By: Vivek Mishra

Hifzurehman and Ehsan-Ul-Haque Patel, directors of a Leicester textile company, have been jailed for setting up fake subcontractors to evade £1.3 million in tax.

Their company, Midlands Trading Ltd, produced clothes for brands such as Boohoo, Primark and New Look.

They used fake invoices from non-existent companies to avoid paying VAT (value added tax), they reported Leicester Mercury.

A government spokesman described their actions as “a relentless and sustained attack on the tax system” and noted that their earnings were spent on cars and property instead of public services.

Midlands Trading Ltd was established in 2014. HM Revenue & Customs (HMRC) first became suspicious in 2015 during an unannounced inspection at their factory in Benson Street, Spinney Hills, Leicester. The company provided fake invoices and the registration cards of the factory workers disappeared during the visit.

Hifzurehman Patel, 40, and Ehsan-Ul-Haque Patel, 46, created a network of shell companies to evade VAT, continuing the fraud until 2017, the newspaper reported. They falsely claimed the clothes were made elsewhere, while producing them themselves and selling them to mainstream retailers and online, reducing their VAT liability.

At Leicester Crown Court on Friday 17 May, Hifzurehman Patel was found guilty of conspiracy to evade VAT and two counts of money laundering. He was sentenced to five years in prison, he reported Leicester Mercury. Ehsan-Ul-Haque Patel received a 47-month prison sentence after pleading guilty to the same charges.

Pravinbhai Valland, 54, was also implicated and received a 24-month prison sentence, suspended for two years, after admitting conspiracy to evade VAT, the newspaper reported. He must complete 300 hours of unpaid work and observe a three-month curfew.

Mark Robinson from HMRC’s Fraud Investigation Service said: “Hifzurehman 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 has instead been 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 that tax cheats do not gain an unfair advantage over their law-abiding competitors.”