Muazam Sarfaraz, set up Bullioncard (UK) Ltd in March 2013 to manage the new debit card and customer identity system for the scrap metal trade. The following year he tried to register for VAT using his father’s name. HMRC rejected the registration as all of the contact and accounts for the company were in Sarfaraz's name.

A subsequent investigation discovered Sarfaraz had been faking records and invoices and inflating the company income to support fraudulent VAT repayment claims.

Sarfaraz filed his first VAT claim for a £320,679 repayment in May 2015. Investigators discovered the company traded a little when first set up and had three employees but there was no evidence of any substantial business activity.

At Wolverhampton Crown Court Sarfaraz pleaded guilty to being knowingly concerned in the fraudulent evasion of VAT. He admitted inflating the company income, overstating a loan from a local charity and falsifying bank statements, business records and invoices from a supplier. He said he committed the fraud to pay off personal debts, including private school fees for his children and debts accrued running his business.

He was further charged with offences relating to the Company Directors Disqualification Act to which he also pleaded guilty.

On sentencing Sarfaraz, the judge said: ‘The attempt (to commit fraud) was for your own benefit and you have been motivated by personal gain. You blatantly disregarded the directors disqualification. You are very lucky, I hope you realise how lucky you are.’

Sarfaraz was given 20 months imprisonment, suspended for two years, ordered to carry out 200 hours of unpaid work and was banned from being a director of any company registered in the UK for 15 years.

Richard Young, assistant director of fraud investigation service at HMRC, said: ‘Sarfaraz abused the tax system, attempting to commit fraud intentionally, to pay off debts and to support a lifestyle beyond his means.’