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Recruitment directors sentenced for tax fraud

Press Release   •   Jan 08, 2016 16:37 GMT

Two directors of a recruitment agency who stole more than £245,000 by pocketing their employees’ tax and National Insurance Contributions (NICs) and failing to pay their VAT bills have been sentenced.

Mahmud Hussain, 44, and Iftekhar Rehman, 28, both directors of One Stop Recruitment (Nationwide) Limited, used the Pay As You Earn (PAYE) system to deduct Income Tax and NICs from their employees’ wages, but instead of paying the money to HM Revenue and Customs (HMRC), they pocketed the cash. An HMRC investigation into their tax affairs also revealed they hadn’t paid employer NICs or VAT, using the money to buoy up their business.

Paul Barton, Assistant Director, Fraud Investigation Service, HMRC, said:

“Hussain and Rehman used their employees' tax and National Insurance to fund the business at their expense. In addition Hussain and Rehman failed to pay the VAT that was owed, giving them an unfair advantage over their competitors and other honest businesses that pay what is due.

“This fraudulent behaviour is never acceptable and HMRC will work to bring to justice anyone involved in this type of criminality. If you have information about suspected fraud please contact our 24 hour Hotline on 0800 59 5000.”

Mahmud Hussain was today jailed for 15 months and Iftekhar Rehman was given 41 weeks in prison, suspended for 18 months, as well 300 hours of unpaid work.

Hussain and Rehman, who traded as One Stop Recruitment (Nationwide) Limited, provided factory workers and labourers for seasonal work. The pair, who based their business in Whittlesey in Peterborough, were caught after HMRC officers visited their premises to inspect business records. The officers found payroll details for 150 employees, who wrongly thought that their tax and NICs totalling £127,033 had been paid to HMRC. Further investigations also found that £118,311 was owed in unpaid VAT.

Confiscation will be sought to recover the proceeds of their crime.

Notes for Editors

  1. Mahmud Hussain, (DOB 07/08/1971) of Masbrough Street, Rotherham, formerly of Fulbridge Road, Peterborough. He was charged with three counts of tax evasion in March 2015. He pleaded guilty to all three charges on 26 November 2015. He was sentenced to 15 months in prison at Peterborough Crown Court (sitting at Huntingdon Magistrates Court) today. He was disqualified from acting as a director for six years.
  2. Iftekhar Rehman, (DOB 22/01/1987) of Fulbridge Road, Peterborough was charged with three counts of tax evasion in July 2015. He pleaded guilty all three charges at Peterborough Crown Court (sitting at Huntingdon Magistrates Court) on 7 December 2015. He was sentenced to 41 weeks in prison, suspended for 18 months, at the same court today. He must also carry out 300 hours of unpaid work. He was disqualified from acting as a director for two years.
  3. The business, One Stop Recruitment (Nationwide) Limited, was based at: Unit 1a Kings Dyke, Whittlesey, Peterborough. One Stop Recruitment (Nationwide) Limited traded between 1 August 2011 until it was placed into administration on 19 July 2012. However Hussain continued to trade until December 2012, even though the company was in administration.
  4. Iftekhar and Hussain were each charged on three counts as follows: one count of evasion of Value Added Tax (VAT), contrary to section 72 of the Value Added Tax Act 1994; one count of evasion of Pay As You Earn (PAYE) income tax, contrary to section 106a of the Taxes Management Act 1970; and one count of evasion of National Insurance Contributions (NICs), contrary to section 114 of the Social Security Administration Act 1992.
  5. Follow HMRC Press Office on Twitter @HMRCpressoffice
  6. HMRC's Flickr channel www.flickr.com/hmrc.gov.uk

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.