Lyndon Porretta, from Newport was a carpenter, who held management positions in a number of joinery installation companies.

In 2000, Porretta set up Kruz Developments Ltd after he spotted a gap in the market caused by increasing demand for disability access. The company provided installation services to clients such as rehabilitation centres, banks and retailers across the region.

However, work declined during the recession and in late 2015, after inspecting company records, HMRC discovered that Kruz Developments had deliberately filed 14 VAT returns between December 2011 and September 2015 which understated the amount of tax due by a total of £521,814.

This led to a demand for VAT, plus interest of £38,320 and penalties of £183,330, producing a total of £743,464, which Kruz was unable to pay in full. The company later entered into voluntary liquidation in 2016.

The Insolvency Service conducted an investigation following the company’s liquidation and confirmed that between at least 7 February 2012 and 6 November 2015 Porretta caused Kruz to provide inaccurate VAT information to HMRC. As a result, HMRC was owed £637,197 at liquidation.

Wendy Jones, the Insolvency Service’s deputy head of insolvent investigations, said: ‘Unlike normal trade creditors, HMRC relies on the taxpayer to disclose the correct amount that is owed to them, so a failure to file accurate returns puts them at a disadvantage to other creditors.

‘Deliberately understating sales in order to reduce the VAT to be paid to HMRC is dishonest. This can also result in understated company profits leading to underpayments of Corporation Tax. Both give a company an unfair advantage over competitors.’

Report by Pat Sweet