Fife man to pay back community after £45k tax dodge

A Fife man defrauded HMRC of £45,000 in income tax and national insurance contributions.

Sean Hughes appeared at Dunfermline Sheriff Court for sentencing after earlier pleading guilty to the seven-year con, between May 19 2012 and April 5 2019.

The 36-year-old admitted being knowingly concerned in the fraudulent evasion of £40,000 in income tax payments by concealing and failing to declare his income to HMRC.

Hughes, of New Lochran Moss, Blairadam, further admitted the fraudulent evasion of £5,000 in national insurance contributions by not declaring his full earnings.

Arguing for a non-custodial sentence, Hughes’ defence lawyer said his client has repaid £23,000 to HMRC so far and will continue repayments if at liberty.

The solicitor said Hughes is a “hard working man committed to family” and that his wife is due to give birth in January.

Sheriff Susan Duff noted the length of time over which the offence was committed and a previous conviction for fraud.

She said Hughes’ conduct merited a custodial sentence of 27 months but if she were to impose this, his family would lose their accommodation and would probably be reliant on the state, which would also foot the bill for his imprisonment.

Alternatively the rest of the money would be paid back if he retained his liberty.

Sheriff Duff said as well as returning the money, he should pay for his dishonesty with unpaid community work – the maximum available 300 hours – and a 12-month curfew order as a direct alternative to custody.

The scam

Prosecutor Douglas Thomson told the court previously the case originated from a HMRC probe into a money service called Spectrum Financial Services Ltd, which offered cheque-cashing facilities for a fee.

Hughes was an account holder with Spectrum and a large number of cheques had been deposited into his account.

Mr Thomson said the purpose of cashing cheques this way is to avoid using more conventional service providers such as banks that have greater scrutiny, making it easier for Hughes to under declare his income to HMRC.

The court heard Spectrum Financial Services Ltd was shut down following a raid in 2015.

Examination of the records recovered during a search of their premises showed Hughes had used Spectrum to process cheques from third parties and received bank transfers from third parties.

Hughes continued to under-declare his income after Spectrum was shut down but had resorted to paying cheques and receiving transfers through his personal bank account.

He was self-employed throughout the period and knowingly failed to provide his accountant with a full and accurate record of all receipts, invoices and bank transfers to allow them to submit accurate returns on his behalf.

Instead, he declared the accuracy of the figures he provided.

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