The leader of an organised criminal gang who was jailed for 15 years for his part in a £38m VAT scam relating to fraudulent trading of emissions allowances must pay back nearly £13m to HMRC, or face 10 further years in prison.

Sandeep Dosanjh, who is from London, has been ordered to pay back £3m in hidden assets within three months and the remainder of the £12.87m within six months.

Dosanjh was part of a gang which committed fraud by setting up a complex chain of bogus companies importing the carbon credits free of VAT into the UK. They then sold the credits on, charging VAT which was never paid to HMRC, and then dissolved the importing companies.

The credits were then sold on again between three further 'buffer' companies - also run by the gang - before finally being sold on to legitimate companies so the trading chain appeared legal. The VAT charged by the 'missing trader' was then shared out between the gang.

The trades were made in a matter of minutes via a computer system, and the VAT payments were laundered via offshore bank accounts in the United Arab Emirates. The missing trader fraud took place over a six month period starting in January 2009, and changes in the law relating to carbon credit VAT have been introduced as a result of the HMRC's investigation.

Robert Alder, HMRC criminal investigations, said: 'Dosanjh enjoyed a lavish lifestyle, investing the proceeds of his crimes in property and luxury cars. This large confiscation order shows that HMRC is committed to not just bring criminals to justice, but also to ensure that we recover the money stolen from the taxpayer by criminals and return it to the Exchequer.'