An Indian-origin fashion designer has been jailed for five years in the UK after being found guilty of attempting to steal one million pounds in tax fraud.
Sheel Khemka, 42, set up 12 companies and used them to front his scam. He had claimed to be a designer to the stars, appearing in a feature in ‘Vogue’ magazine for his Lofli range of jeans.
However, the UK’s HMRC (Her Majesty’s Revenue and Customs) got suspicious of his trading activity, involving unpaid bills and VAT claims.
It emerged that Khemka had only imported jeans worth 24,000 pounds from the US, which he passed around between 12 companies using false names and invoices to claim he was selling millions of pounds worth of designer garments in order to claim back VAT, the ‘Evening Standard’ reported.
“The scheme was dishonest from the start. I have severe doubts if jeans existed at all and you set up companies using the hijacked identities of friends. This was a sophisticated and well-planned fraud from which you used a lot of money on yourself — 200,000 pounds to buy a house,” said Judge Nicholas Ainley at Croydon Crown Court during sentencing on Wednesday.
Khemka was sentenced to five years in prison and also banned from operating as a company director for seven years.
The fraudulently obtained money has been paid back. Alan Tully, assistant director of the Fraud Investigation service at HMRC, said: “Khemka set up this fraud through greed, to fund a lavish lifestyle at the taxpayers’ expense.
Using the proceeds of his crime he bought a luxury home in Gloucestershire and a top-of-the-range Mercedes car.
“If he had not been stopped by HMRC officers he would have stolen millions of pounds of VAT. This was a sophisticated fraud that involved detailed planning and forgery, all for the benefit of one criminal.”
According to the paper, Khemka submitted 12 VAT repayment claims between May and October 2009, receiving almost 498,000 pounds in refunds. A further 11 claims totalling more than 500,000 pounds, submitted during 2009, were not paid out.
Khemka based his business in London with satellite offices across the UK, which were often rented shortly before a visit by HMRC inspectors to check the repayment claims.
The “small quantity” of designer jeans bought from the US were moved from business to business with new packaging and labels, in an attempt to show that they had just been imported.
Khemka printed fake invoices, sales orders and other papers shortly before each meeting with HMRC, and asked local accountancy firms to sit in on the visits for an air of legitimacy.
He was arrested in central London in November 2011 and later charged with cheating the public revenue.