The boss of a clothing company who bought a house with money from a £175,000 tax fraud has been jailed for sixteen months and is subject to a confiscation order
An HMRC investigation revealed that Pratap Modhvadia, from Leicester, deliberately hid company sales and lied about his role as director to evade paying VAT and corporation tax before stashing the proceeds in a secret bank account. He then used more than half of the money to pay a £60,000 deposit on his home.
HMRC uncovered the fraud after checks on another company’s tax returns raised questions about large payments made to Modhvadia’s firm, Fashion Nation Trading Ltd.
During the investigation officers found that Modhvadia had under-declared sales for Fashion Nation to evade paying VAT and corporation tax. He had a second company, Empire Clothing (Leicester) Ltd, with a separate bank account but he only told his accountant about Fashion Nation.
Investigators found he stood down as director of Fashion Nation shortly before making his mortgage application. They believe this was to avoid submitting company records for his application, but continued running the company as an employee.
Modhvadia admitted the frauds during a hearing at Leicester Crown Court.
Nick Stone, assistant director, fraud investigation service, HMRC, said: ‘Modhvadia made a deliberate decision to lie to evade tax obligations to line his own pockets. Now he is paying the price.’
Report by Pat Sweet
