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Gregory Allnutt, 40, from Croydon in South London has been found guilty of dodging tax on £4.7m worth of electrical goods traded on eBay …

The ebay trader has been sentenced to 20 months in prison for avoiding £429,000 VAT on cut price electrical goods that he sold on the online auction site.

After originally setting up a company called Shapewise that would allow him to sell nutrition products from his own home, Allnut instead decided that he would sell reduced price electrical good online for more profit.

Allnutt reportedly earned £4,000 per month over a period of three years.

The electrical goods sold on eBay were originally bought tax-free from the European Union through the online retailer Pixmania, who sell a large range of electrical goods including digital cameras, televisions, computers and household appliances.

In his defence Allnutt told the court that he was not aware he was liable to pay VAT on the electrical goods he traded on eBay, although his accountant had brought to his attention that he owed £67,000 in VAT during a meeting in 2007.

Despite being aware of this Allnut proceeded trading electrical goods for a further 3 years via the online auction site until he was caught by HMRC last year in December 2010.

David Hewitt, prosecutor for the case said:

“It wasn’t until 2007 that [Mr. Allnut] realised he wasn’t paying it properly. At that point he was in too deep and he realised he was stuck. He realised if he charged VAT he wasn’t able to compete.

“He did try it legitimately but he couldn’t make the system work because he couldn’t make enough money.”

After failing to file any accounts for his company ‘Shapewise’, HMRC automatically de-registered Allnut’s VAT number. Following the Revenue’s action he then re-registered to continue trading under the new company name ‘Specialist Electricals’.

Mr. Hewitt went on to brand the fraud as ‘simple’ and that the total amount of VAT avoided by Allnut was £420,000.

Upon sentencing, Judge Anthony Leonard QC, said:

“Being aware of your obligations to pay VAT you carried out a thoroughly dishonest scheme to avoid paying VAT.

“You avoided £429,000 of VAT and because you were able to offer the goods at process below those a trader paying VAT could you have prevented honest taxpaying traders competing with you.

“You claim that you had become trapped into the scheme when you discovered that you owed £67,000 to the Revenue.

“That should have led you to stop your trading altogether but you decided to carry on in full knowledge that you were doing what was wrong and that you owed money to the Revenue.”

During the trial Gregory Allnut admitted to 12 counts of fraud.

Kevin Kinsella Jnr, of KinsellaTax, said:

“Seems to me a run of the mill type VAT Fraud. Nothing too complicated.”

If you think HMRC suspect you of any kind of tax fraudor VAT fraud,or you have already received that dreaded tax enquiry letter from HMRC. You need to contact a tax enquiry expert IMMEDIATELY.

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