Fabric Firm VAT Fraudsters Jailed for Nearly Nine Years
Two men set up a cunning web of front companies to dodge £1.3 million in VAT between 2014 and 2017. Hifzurrehman Patel, 40, and Ehsan-Ul-Haque Dawood Patel, 46, ran their scam through Midlands Trading Ltd, a clothes manufacturing firm.
Blagged by HMRC’s Rag Trade Taskforce
The pair were caught after an unannounced raid by a specialist rag trade taskforce, including HM Revenue and Customs officers, at their factory in December 2015. Officers grew suspicious when staff clock cards vanished during their visit and the company handed over dodgy invoices.
Investigators uncovered that the Patels were funneling VAT liabilities through a series of bogus front companies, claiming those firms made the clothes instead. In reality, the Patels produced the garments themselves, then sold them on to high street and online retailers — all the while avoiding tax.
‘Relentless Attack on the Tax System’
“Hifzurrehman and Ehsan Patel carried out a relentless and sustained attack on the tax system,” said Mark Robinson, Operational Lead at HMRC’s Fraud Investigation Service. “They forged documents and invented contracts to evade VAT. This money should have funded vital public services but was instead splurged on cars and property.”
“Tax fraud isn’t victimless. It hits the public services we all rely on. We’re cracking down to ensure cheats don’t get ahead of honest businesses. Anyone with tips on tax fraud can report it to HMRC online.”
Paula Lloyd, Specialist Prosecutor at the Crown Prosecution Service, added: “While honest businesses paid their dues, these criminals funded a cosy lifestyle on the back of hardworking taxpayers. We’re determined to seize any assets bought with this dirty money and make sure they face full consequences. Let this be a warning to others tempted to cheat.”
More Convictions and Asset Recovery Underway
Three others involved in the fraud were also convicted. Pravinbhai Purshotam Valland, 54, received a suspended two-year jail term at Leicester Crown Court on 17 May 2024. Mohsin Dawood Patel, 42, and Munaf Yusuf Banglawala, 62, are due to be sentenced on 21 June 2024.
Efforts to recover the stolen £1.3 million have now begun, striking a blow against tax dodgers in the UK’s garment industry.
