Mobile trader siblings shamed over VAT scam

Birmingham-based brothers are disqualified as company directors for 15 years after being found guilty of carousel fraud

Investigations led by the Insolvency Service into alleged VAT or "missing trader/carousel" fraud have resulted in two brothers being handed a 15-year ban from being company directors.

Waseem and Ajaz Saddique, directors of Birmingham-based mobile phone wholesaler Winnact Ltd, were sentenced at separate hearings in May for involving the company in a scheme linked to VAT fraud, and making wrongful VAT reclaims against HM Revenue & Customs (HMRC).

The sentences – which mean neither brother can resume a directorship until 2029 – resulted from investigations by a specialist team for the Insolvency Service, which was chasing debts owed to HMRC for unpaid VAT.

Between May and September 2006, Winnact Ltd was found to have bought mobile phones in the UK and other EC countries, making onward sales of £29.2m to wholesalers in the UK and onward sales of £41.4m to wholesalers in other EC countries and Dubai. The firm then filed monthly returns with HMRC reclaiming VAT monies.

According to the investigation, Winnact Ltd took part in a "complex and orchestrated scheme" where VAT returns were "staggered" by multiple contratraders over a period of time in order to hide the multimillion-pound VAT default of a single trader.

Paul Titherington, official receiver for the Public Interest Unit, said in a statement: “Winnact was involved in trading and making wrongful reclaims in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.

“This is not a victimless crime, the main impact being on honest taxpayers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front-line services. Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.”

He warned: “The Insolvency Service will not hesitate to use its enforcement powers to investigate and disqualify directors whose companies defraud the public purse.”