Ravinder Singh Mandair was the director of Worldwide Trading Services (UK) Ltd, based in Birmingham, which traded as a labour provider in the construction industry, sourcing and supplying labour to third parties.

The Insolvency Service’s investigation found that Mandair had caused WTS to engage in a scheme whereby it represented to HMRC that individuals it employed were subcontractors who were both registered for VAT and eligible to be paid without deduction for income tax under the Construction Industry Scheme (CIS).

This had a dual benefit to WTS in that it could reclaim VAT to which it was not entitled and could also pay its employees without making income tax and national insurance deductions.

WTS kept a record of payments made in this way in handwritten ledgers (‘black books’) which were seized by the provisional liquidator appointed in November 2010 following presentation of a winding up petition by HMRC.

It was the black books which evidenced the way in which the scam had operated. VAT losses to HMRC have been estimated at £469,000.

Furthermore, the investigation discredited all labour supplies ‘received’ by WTS, totalling over of £9m, as it was unfeasible for the suppliers to have provided the labour that WTS had claimed.

The VAT claimed by WTS on these supplies was £1.45m including the £469,000 from the black books transactions. The income tax liability owed to HMRC is believed to be considerable but has not been quantified by HMRC.

WTS also failed to keep or deliver up proper records to the liquidator. This meant that, amongst other things, the purpose of cash withdrawals of £2.9m made from WTS’s bank account could not be explained.

Ken Beasley, official receiver of the public interest unit, said: ‘This was a sophisticated and lucrative attack on the public purse which caused considerable losses to HMRC. Investigations showed evidence of collusion between WTS, its suppliers and accountants. Mr Mandair’s lengthy disqualification reflects the severity of the misconduct perpetrated.’