Press release -
Payroll fraud ringleader ordered to pay £1.7m
A globe-trotting tax consultant who stole £6.9 million from construction workers’ pay packets has been ordered to repay £1.7 million or face a further four years in jail.
Former Inland Revenue employee, David Michael Hughes, known as Mike Hughes, 55, from Kent, was jailed for nine-and-a-half years in August 2018. While posing as a legitimate payroll service provider, he led a financial conspiracy using a web of bank accounts, plus UK and offshore companies to steal millions in taxes from his clients.
The money paid by clients and deducted from workers’ wages, should have been paid to HM Revenue and Customs (HMRC). Instead, it was split between Hughes and his co-conspirators.
At Southwark Crown Court on Monday (14 June 2021), Hughes was ordered to pay £1.7m within three months or face a further four years in jail and still owe the money. A Serious Crime Prevention Order (SCPO) will be issued against Hughes for three years when he leaves prison, which will require him to comply with specific terms and conditions relating to his finances. If he breaches the order, he could be prosecuted and jailed.
Susie White, Operational Lead, Fraud Investigation Service, HMRC, said:
“Hughes abused a system which is supposed to ensure workers are paid correctly and taxes go to HMRC - instead he pocketed millions. If he doesn’t pay this confiscation order, Hughes, who is currently in prison, will stay there even longer and still owe the money.
“Our actions don’t stop once someone is convicted, we will look to reclaim the stolen money. If you know of anyone who is committing tax fraud, you can report them to HMRC online, or call our Fraud Hotline on 0800 788 887.”
Hughes left the UK in September 2011 and travelled to Chile and Dubai before living in Northern Cyprus, which does not have an extradition treaty with the UK. He was arrested by HMRC investigators at Heathrow Airport in January 2018 when he arrived on a flight from Istanbul, Turkey.
At Southwark Crown Court in August 2018, Hughes was convicted of three counts of conspiracy to cheat the public revenue, two counts of false accounting and providing false information, and one count of money laundering. He was jailed for nine-and-a-half years. Three other men were jailed for a total of 19 years in October 2016.
HMRC has already secured confiscation orders totalling £3.5 million in January 2018 from two of his co-conspirators.
HMRC and the National Crime Agency (NCA) are aware of the threat of payroll scams operating in the UK and remind businesses to ensure that they carry out ‘due diligence’ checks before appointing a payroll company to act on their behalf.
Notes for Editors
- A news release was issued at the sentencing of Hughes’s co-conspirators in October 2016. Another news release was issued after the confiscation hearing in January 2018.
- A further news release was issued at the sentencing of Hughes in August 2018
- On 14 June 2021 David Michael Hughes, known as Mike Hughes, (DOB 28.04.66) a former tax consultant, previously of Spendiff, Cooling, Rochester, Kent, was told to pay a £1,732,140.08 confiscation order within three months or face having four years added to his nine-and-a-half year sentence imposed in August 2018.
- A Serious Crime Prevention Order (SCPO) will be issued against Hughes for three years when he leaves prison, which will require compliance with several terms and conditions surrounding his bank accounts, business interests, income, finances and assets. A SCPO is designed to reduce the risk of re-offending and breaching it, is considered a criminal offence. The punishment for breaching such an order ranges from a fine to five years imprisonment.
- He was jailed for nine-and-a-half years for conspiracy to cheat the public revenue; for three and a half years for false accounting; and six years for money laundering. These sentences will be served concurrently.
- Hughes was disqualified from being a company director for 12 years when he was sentenced in 2018.
- Hughes was arrested by HMRC officers as he arrived in the UK on 23 January 2018. He was charged the same day and remanded in custody. He pleaded not guilty at Southwark Crown Court on 16 March 2018. He was a former director of various Rochester based accountancy and financial management companies, along with Aquil Ahmed including: Keepers Taxation & Accountancy Ltd; Keepers Taxation and Accountancy Services Ltd; Keepers Financial Management Ltd; and Keepers Management which later became Medway Properties Ltd. Hughes was sole director of DMH Resources Ltd, Tempelton Capital Consultancy Ltd, Continental Trade Personnel Ltd, LAT Development Personnel Ltd, General Company Consultancy Ltd and VRT Vantage Ltd.
- This investigation was into Rochester based ‘Keepers’ accountancy companies only. Accountancy firms of a similar name were not subject to this investigation.
- Guidance on Due Diligence checks for employers can be found here.
- People with concerns about gaps in their contribution history can contact the PAYE helpline on 0300 200 3300.
- Anyone with information regarding tax fraud or payroll fraud should report it online here or contact our Fraud Hotline on 0800 788 887.
- Follow HMRC Press Office 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.