A Surrey businessman jailed for his role in a £38m VAT fraud has been ordered to repay £2.4m from the proceeds within six months, or face a further seven years in prison.

Daamin Kaif was jailed for six and a half years in 2011. He was one of a 10-man organised crime gang who together received prison sentences totalling over 40 years for their part in a 'missing trader' tax fraud which used the import of mobile phones and computer parts to manipulate the VAT system.

David Cowie, assistant director of criminal investigation for HMRC, said: 'Daamin Kaif, enjoyed a lavish lifestyle funded by his involvement in the fraud. He enjoyed numerous trips to Dubai, invested in property, including a house worth £2m in Virginia Water, Surrey, and even purchased a piano from Harrods, London, for £14,000.'

The gang set up highly complex chains of VAT registered companies in the UK and abroad, including Sky Computers UK Ltd, based in Middlesex and Maxro Technology Ltd, based in Surrey. Items were imported from Dubai to the UK via Europe and then sold on, with VAT added, through a series of companies.

Once the goods had been sold on a number of times they would be exported back to the EU. The exporter would then claim a VAT credit from HMRC for the VAT paid on the purchase of the goods - although this was never paid in the first place. This money was then siphoned off and laundered through overseas companies in Dubai and Spain.