A company director who claimed to trade in designer jeans from the USA has been jailed for five years after being found guilty of attempting to steal £1 million in tax.
Harrow and Oxford educated, Sheel Khemka, 42, set up 12 companies and used them to front his scam. He used false names and fake invoices, claiming that he was selling millions of pounds worth of expensive designer jeans. But he only made three importations, worth £24,000, using the same jeans each time he attempted to claim VAT back from HM Revenue and Customs (HMRC).
Khemka submitted 12 VAT repayment claims between May and October 2009, receiving almost £498,000 in refunds. A further 11 claims totalling more than £500,000, submitted during 2009, were not paid out by HMRC.
Alan Tully, Assistant Director, Fraud Investigation Service, 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. If you know of anyone committing VAT fraud you can report them by calling our 24-hour hotline on 0800 59 5000.”
Khemka was found guilty by unanimous verdict at Croydon Crown Court today and jailed for five years. He was also banned from operating as a company director for seven years. The money fraudulently obtained has since been paid back.
Khemka located his sham business premises in London and across various English counties, often renting office and warehouse space at short notice just before a visit by HMRC to check the repayment claims. Most of the company names were initially registered to his London residential address, with ‘offices’ moving to various locations including Clacton, Penzance, Retford, Bognor Regis and Milton Keynes.
The small quantity of designer jeans actually purchased from the United States 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 documents shortly before each meeting with HMRC, and even asked innocent local accountancy firms to sit in on the visits, to add legitimacy.
The fraud was uncovered after investigators became suspicious about his trading activity and VAT claims. They found that Khemka had left a trail of unpaidbills and empty offices. He used five different names to sign the VAT forms and to arrange meetings with HMRC. Throughout the fraud Khemka lived at a family-owned property in Mayfair. He was arrested in Central London in November 2011 and later charged with cheating the public revenue.
His Honour Judge N J Ainley, said:
“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 to buy a house."
At the time of his arrest Khemka told HMRC officers that he held no business records. The details were discovered on his computer by investigators, who also uncovered an elaborate web of financial transactions between the retail and wholesale companies Khemka controlled. Investigators also gathered evidence of Khemka’s fraudulent activity by interviewing witnesses in the UK and United States.
Notes for Editors
- Sheel Khemka (14/4/1974) of Cadogan Place, London, SW1, previously of Siddington, near Cirencester, Gloucestershire. He lived in Berkeley Street, London, W1 at the time of the fraud.
- Khemka is known to have used the names of friends and acquaintances during the fraud, including Matthew Steeples, Matthew Gannon, Richard Gannon, Rafe Eddington and Alexander De Cadenet.
- Khemka attempted to reclaim £1,043,933.08. The total amount of VAT refunded was £497,774.15.
- Khemka was charged on 08 August 2012 with cheating the public revenue, contrary to Common Law, and fraud for financial gain, contrary to the Fraud Act 2006. The offences took place between 2009 and 2011 at various locations around the United Kingdom.
- Sheel Khemka’swholesale clothing and retail company directorships linked to this investigation included suppliers: Lofli Jeans Ltd (London, then Rangemore, Staffordshire) and DWM Garment Processing Ltd (Penzance, Cornwall). The wholesale companies were: Bluebells Casualwear Ltd (London, then Chippenham, Wiltshire), Ce Soir Ltd (London, then Rangemore, then Banbury, Oxfordshire), Cweed Designer Ltd (London), Caroline & Ruth Dailywear Ltd (London, then Retford, Nottinghamshire), Tetbury Fashions Ltd (London, then Penzance), The Real Earth Fashions Ltd (London, then Bletchley Park, Buckinghamshire, then Forest Row, East Sussex), Landmark Ladieswear Ltd (London, then Penzance), Galleria Conti For Ladies Ltd (London, then Bognor Regis, West Sussex), Peppermint Grove Casuals Ltd (London, then Banbury, then London, then Bletchley Park), Intermix Concept Ltd (London, then Maidenhead, Berkshire), Hipkyss Premium Denim Ltd (London, then Chippenham, then Cirencester, Gloucestershire) and Iris Denimwear Ltd (London, then Clacton-on-Sea, Essex).
- Companies with names similar to those listed are not part of this fraud.
- Khemka is known to have held at least twenty other limited company directorships.
- A photo is available on HMRC’s Flickr channel www.flickr.com/hmrcgovuk
- Follow HMRC on Twitter @HMRCpressoffice.
Issued by HM Revenue & Customs Press Office
HM Revenue & Customs (HMRC) is the UK’s tax authority.
HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.