Shiraz Omar Khan (41) and Omar Chaudry Shareef (34), both directors of ISK Management Ventures Ltd, carbon credit wholesalers based in Croydon, Surrey have given undertakings to the Secretary of State for Business, Innovation & Skills to be disqualified as directors for a period of 9 years and 8 years respectively from 1 July 2015 for involving the company in a scheme linked to VAT fraud.
Their disqualifications from 1 July 2015 means that Mr Khan and Mr Shareef cannot promote, manage, or be directors of a limited company until 2024 for and 2023, respectively.
The disqualifications follow investigations by a specialist team of the Insolvency Service, whose involvement commenced with the winding up of the company, for debts owed to a supplier, which was itself wound up by HMRC for VAT losses.
The investigation uncovered that between June and July 2009, ISK Management Ventures Ltd, buying carbon emission credits (also known as European Union Emission Allowances) in the UK from companies that were missing traders (i.e. traders that had not paid over VAT due to HMRC), made onward sales of over 189 million to other wholesalers in the UK. ISK acted as a buffer intermediate trader separating the end user from the missing traders earlier in the supply chains.
Such missing trader fraud indicators included, no significant investment made yet a rapid increase in turnover to 189 million within 6 weeks of trading, the rapid succession of same day trades with all the goods sold without any left over stock, sourcing suppliers and customers through the same internet forums and websites the use of offshore banks.
Both of ISKs suppliers of carbon emission credits were identified as missing traders with a common director. The directors of ISK failed to conduct adequate due diligence into the supplier companies despite being made aware of the high risk of VAT fraud in their trade sector. The directors failed to carry out the most basic checks that would have identified these suppliers were connected, hijacked defaulting traders. All of the deals conducted by ISK were traced back to tax losses totalling at least 19 million.
Commenting on this case Paul Titherington, Official Receiver in the Public Interest Unit, part of the Insolvency Service, said:
ISK Management Ventures Ltd was involved in trading in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.
This is not a victimless crime, the main impact being on honest tax payers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front line services.
Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.
The Insolvency Service will not hesitate to use its enforcement powers to investigate and disqualify directors whose companies defraud the public purse.