Mohammed Aswar Majeed, 33 illegally transferred money from his alcohol distribution firm to buy 30 cars, including Bentleys, Lamborghinis and a £650,000 Ferrari Enzo.
He built up a lucrative property portfolio that featured a £1.6million farmhouse in Hove, East Sussex, and an £800,000 penthouse in Brighton.
He also kept “extravagant mistresses” spent a fortune at luxury shops and lavished around £20,000 on one weekend in Monaco. Majeed, of Brighton, was also a former owner of non-league football side Crawley Town.
When the Inland Revenue began an investigation he hid £500,000 in used £10 and £20 notes in a Harrods safe deposit box as a “next egg”, hoping it would be safe from the prying eyes of the authorities.
But investigators managed to unravel his fraud, and yesterday Majeed was jailed for three and half years after admitting cheating the Revenue, failing to keep proper accounts and concealing criminal property.
Sentencing him at Southwark Crown Court in London, Judge Christopher Hardy branded Majeed a “dishonest and manipulative rogue”.
He said “You quite blatantly used very large sums of cash generated by your business as an almost bottomless piggy bank to fund your own extremely lavish lifestyle, which included a string of luxury motor cars, expensive properties and, so I am told, extravagant mistresses”.
In two and a half years £42million passed through the accounts of his business, SA Retail, mostly in cash. Yet in one year Majeed, who was sole director of the limited company, paid as little as £3,155 in tax after declaring a fraction of his earnings. The businessman was “wholly unqualified” to take over the family business following the death of his mother in 2000, the court heard. Graham Trembarth, defending, said Majeed, who left school at 16 with no qualifications, dreamed of becoming a mechanic because of his love of cars but ended up in charge of SA Retail.
But the judge said “You are not a man of good character. It has been put forward quite correctly that his was a relatively unsophisticated fraud and I have accepted that. But you must consider that this was not, in your case, a one off fall from grace and it is quite clear that up until now you have developed all the qualities of a dishonest and manipulative rogue.”
Prosecutor Lisa Wilding said: “It is apparent that the defendant surrounded himself with people who didn’t ask him too many questions. He had an entourage of people who would hang around him and undertake menial tasks for him. His book keeper referred to these people as his minions”
“Majeed and his cronies would often arrive at bank branches and demand to withdraw enormous quantities of cash, so much that staff had to put in special requests. It was wholly exceptional behaviour, she said. Miss Wilding added: This defendant used the business bank accounts inappropriately to fund a high-living, extravagant lifestyle. He withdrew large sums of money, usually as cash, from his wholesale business”
“The money in that business bank account belongs to the business; it is not available to be used as a generous piggy bank by this defendant, which is precisely what happened”.
Majeed, who has a string of convictions for violence and dishonesty, still owes £769,493 to the taxman, having already paid back almost £163,000 since the investigation was launched. His counsel said the full tax bill would be paid back. He was in the process of selling his properties and assets had been secured, the court was told.
Kevin Kinsella Jnr of KinsellaTax today said:
“After reading The Independent story about the taxman being £22 billion out of pocket will this put more pressure on tax investigators to recover more money by way of interest and tax penalties?”
At the present time the maximum one would pay for a penalty is 100% of the tax.
Tax investigators usually negotiate sums in the region of 10% through to 50%.
Kevin thinks that more pressure will be put on HMRC investigators to negotiate much higher penalties to recover the lost tax.
£5 billion was lost in Corporation Tax mostly from the financial sector which endured its worst quota for more than half a century.
The Exchequer collected £6.4 billion less in VAT partly because shoppers stayed at home and partly because the rate was cut to 15% in December to breathe life into high streets before Christmas.
Income tax and National Insurance contributions fell by £5.7 billion because of lower rates and higher allowances and because few staff in the financial sectors were paid bonuses.
The Government is setting aside £3.3 billion more for ‘bad debts’ and £7.2 billion more for legal disputes with taxpayers.
Philip Hammond, the shadow Chief Secretary to the Treasury said “A plummeting tax take is the inevitable consequence of Gordon Brown’s recession – and it shows how hard families and businesses are being hit.”
An HMRC spokesman said “Collecting tax is more challenging at this time than ever”.
Kevin Kinsella Jnr at KinsellaTax always wonders how an investigation like this starts. Does it start due to some small matter like a Local Compliance ‘Aspect Investigation’?
An Aspect Investigation is a pretty small, straightforward enquiry dealing into one or two matters relating to a Tax Return.
On many occasions, the accountant who actually dealt with the Return has little idea where the Revenue are going and what started out as a relatively straightforward enquiry can turn into a fully-fledged investigation leading to a huge amount of time, stress and cost.
Accountants are not usually to blame if their client, such as a self-employed motor mechanic, is driving around in a Ferrari which he has failed to tell his accountant about (this is an actual true case). The Ferrari was paid for by £75,000 in cash.
Or the guy who makes the Return saying he only works 10 hours a week as a part time gardener but is actually the local Golf Club’s entrepreneur.
Another true case.
But does this tell the full story?
Mr Majeed has been sentenced to 3 and a half years in prison and if all goes as is usual, in about 16 months time he will leave prison and come back to enjoy the proceeds of crime.
But is this the end of the story?
The Proceeds of Crime Act 2002 and the Money Laundering Regulations are aimed at people just like Mr Majeed and is he in for a surprise during the 16 months he is inside.
It may or may not be that the authorities decide to take proceedings against him as they did recently against one or two other people in prison for fraud and the assets that he obtained through the proceeds of crime could be put up for sale and Mr Majeed could not only end up with a three and a half year sentence but very little to come out to.
I would be interested to know under what procedure HMRC dealt with the investigation.
If it was under the Code of Practice 9 then he would have been given an opportunity to have made a clean breast of everything, settled the tax, paid the liabilities including interest on late tax and got on with his life.
In the new Code of Practice 9, the Revenue made it quite clear that they are not going to prosecute for the tax fraud per se.
Many people take this to be a license to put forward false evidence to support what they actually earn.
This is where they actually cross the line because the Revenue will, without doubt, commence criminal proceedings for the offence of “deceit”.
So there you are. You may be safe from prosecution for the tax fraud but you are not safe if you then put forward false details to try and settle the case – it just won’t work..!