A luxury watch dealer, who avoided £1.25m in tax by falsifying import paperwork claiming that high'end luxury watches including Rolex, Cartier and Breitling, were worth as little as $50 (£39), has been jailed for three years following an HMRC investigation
Darren Reay, from Lincolnshire, admitted misdescribing the watches as low-value ‘precision instruments’ – enabling him to pay import VAT of just £7,805 during a four-year fraud.
Customs duty was not due on the watches he brought in from the US, but import VAT of 20% should have been paid.
HMRC said Reay, who traded online via eBay as Darren Reay Watches and also from Wight’s Watches in Cowes, Isle of Wight, used the money to fund a lavish lifestyle of luxury properties, cars and designer watches.
The investigation began after business records, including diaries, invoices, and shipping and courier documents, were examined as part of an HMRC compliance visit to Wight’s Watches in March 2014.
Documents showed insurance of $25,000 was taken out on US shipments with declared import values of between $50 and $100.
HMRC investigations revealed that over 520 packages had been imported from one retailer in New Jersey, with £6.3m being paid out by money transfer in the same period.
Reay told investigators these watches were imported to order and he would receive commission. The offences took place between March 2011 and March 2015.
Reay left the Isle of Wight in June 2014, but continued trading online through a business registered in Barnet, Greater London, while living in Houghton-le-Spring, County Durham.
At Teesside Crown Court, Reay admitted the fraudulent evasion of VAT totalling £1,252,948 and was jailed for three years.
Over 800 watches were seized during a search of Reay’s then-home in Chilton Moor, Houghton-le-Spring, in March 2015. The judge ordered that these be sold and the proceeds paid to HMRC.
Colin Spinks, assistant director, fraud investigation service, HMRC, said: ‘Reay blatantly lied to steal £1.25m from the UK public. His crimes were driven by pure greed to fund a luxury lifestyle he couldn’t afford. We will ensure honest, hardworking businesses do not suffer from being undercut by fraudsters like Reay.
