An accountant who hid the profits of a Cardiff motor racing business in a £140,000 tax fraud and encouraged other companies to participate in a fraudulent 'tax saving scheme' has been jailed following an HMRC investigation.

Michael Jones was the company secretary of Nick Jones Racing Ltd (NJR). HMRC's investigation found that Jones invited 12 companies, most of them local, to purchase advertising on NJR's race cars and website. The advertising did not materialise, but the participating companies falsely reclaimed the VAT. The directors and sole traders were also personally reimbursed with a gift of 'tax free' money.

Jones profited himself by falsifying the company accounts. He failed to show the real income of the business, and when sponsors made payments to NJR, the money was often quickly transferred to his personal bank accounts within 24 hours. HMRC said the total tax loss as a result was £140,625.

Zoe Ellerbeck, acting assistant director, criminal investigation, HMRC, said: 'Michael Jones operated a scheme where he directly encouraged clients of his accountancy business, J&R Business Services Ltd, to advertise with NJR in order to commit VAT fraud. He also deliberately misrepresented NJR's income to pocket tax that should have been paid to HMRC.'

Following the investigation, Jones pleaded guilty to cheating the Revenue, VAT fraud and money laundering and was sentenced to 32 months imprisonment. The judge described the fraud as 'carefully considered and constructed' and designed using Jones' 'expertise as an accountant'.