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Brothers handed maximum disqualifications 10 September 2014

Two directors of a Birmingham mobile phone wholesaler have been disqualified from acting as company directors for 15 years each.

Brothers Waseem and Ajaz Saddique of Winnact Ltd were disqualified for involving the company in a scheme “linked to VAT fraud”, as well as making wrongful VAT claims against HMRC.

An investigation by a special team of the Insolvency Service found that between May and September 2006 the company used a “Missing Trader Intra-Community” (MTIC) fraud tactic to avoid paying tax on mobile phones brought from the UK and other EC countries.

Winnact Ltd made onward sales of £29.2m to wholesalers in the UK and onward sales of £41.4m to wholesalers in other EC countries and in Dubai, but filed monthly returns with HMRC “reclaiming” UK VAT monies that ‘missing traders’ earlier in supply chains had failed to pay when due to HMRC.

The company acted as a “contratrader” within the MTIC scheme, by “matching and offsetting input and output VAT from purchases and sales in different trading chains”, with the ultimate effect that “VAT returns were ‘staggered’ by multiple contratraders over a period of time in order to hide the £multimillion VAT default of a single trader.”

A petition to wind up the company was presented by HMRC in September 2011 with respect of a debt of £5,251,277 for unpaid VAT.

Paul Titherington, official receiver in the Public Interest Unit, said: “Winnact was involved in trading and making wrongful reclaims in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.

“This is not a victimless crime, the main impact being on honest tax payers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front line services.

“Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.”

 

 

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