Accountant's £2m tax scam paid for luxury holidays
HMRCAn accountant used his workers' tax contributions to pay for luxury holidays and an Aston Martin as part of a £2m fraud, a court has heard.
Kenneth Scott, 69, was a senior partner in the Willis Scott group which employed about 30 people at offices across Tyneside, Wearside and County Durham.
Over at least seven years, he deducted national insurance and income tax from his employees' pay but then pocketed the money instead of passing it on to HMRC, damaging the workers' future entitlement to pensions and benefits.
Scott, who admitted two counts of cheating the public revenue of taxes including VAT, was jailed for four years at Newcastle Crown Court.
The Sunderland-based Willis Scott group was an umbrella for seven financial service companies operating at premises in Hexham, Newcastle, Bishop Auckland and South Shields, the court heard.
Between 2014 and 2021, chartered accountant Scott, of Abbeywood in Fir Tree, County Durham, took PAYE and national insurance contributions from his employees' wages but failed to pass them on to HMRC.
Instead, he used the money to "fund his lifestyle," prosecutor Stephen Grattage said.
'No tax footprint'
The court heard between 2016 and 2020 Scott went on a series of holidays, ranging in cost from £13,000 to £44,000 and including luxury cruises, and bought himself a £73,000 Aston Martin.
In his interview with investigators, Scott admitted he had gone "a bit over the top" with his spending.
The fraud meant Scott's unwitting staff would have unable to claim benefits or possibly even a full state pension due to gaps in their tax payments, the court heard.
Several workers received letters from HMRC informing them they had incomplete national insurance payment histories, while others who left the company were unable to get child support payments and discovered their student loans were not being repaid, Mr Grattage said.
HMRC said about 50 employees had been affected over the fraud period.
During the 2020 coronavirus pandemic, staff were ineligible for the 80% government-funded furlough salary scheme because of their lack of a tax "footprint", with Scott paying a number of staff the money himself, the court heard.
Mr Grattage said part of the fraud went back to at least 2007 but historical documents were not available, meaning Scott could only be charged with offences from 2014 onwards.
Scott also charged clients for VAT but Willis Scott was not registered to pay it, with the accountant taking the money for himself, Mr Grattage said.
When companies said the VAT number provided on invoices was invalid, Scott registered for VAT under the name of one of his dormant companies to try to cover up the fraud, the court heard.
Mr Grattage said the fraud totalled £2.1m but Scott only admitted taking £1.7m.
'Stress and worry'
In mitigation, Christopher Knox said Scott, had already repaid about £490,000, having sold his home and a share of a property in the USA, with a further £990,000 to come from the sale of the business and several of its premises.
Judge Edward Bindloss said, given the luxury purchases made by Scott, the argument also made in mitigation that he was "in difficulty and manfully firefighting to keep the business afloat" carried "no weight".
The judge said there had been real world financial consequences for several of his employees as well as "stress and worry", while Scott had carried on his fraud despite several warnings.
He said the father of three had been considered a "good employer", a "courteous and kind" man who supported people in difficulties, adding he was selling the business to ensure it would continue and the jobs of his workers would be saved.
Scott was also banned from being a company director for 10 years.
Speaking after the sentencing, Gary Darrington of the HMRC said Scott had been in a "position of enormous trust", stole from taxpayers and "damaged" the tax records of his employees.
"As an accountant, [Scott] should have known better," Mr Darrington said.