Restaurateur evaded paying £109,000 in VAT and income tax

Sharif Mohammed Khaled was spared immediate prison for his criminal conduct which was unearthed by HM Revenue and Customs (HMRC).

Khaled, of Penn Hill Avenue, Poole, defrauded £109,000 in his role as the sole director of A.S.A. Restaurateurs Ltd, which was running Indian restaurant Cafe Spice in Sturminster Newton at the time of his offending.

Bournemouth Crown Court heard Khaled parted association with the Bridge Street business following his arrest in January 2019 and he has not been involved since.

Prosecuting, Mike Mason described the 39-year-old’s crime as “the vanishing sales fraud”.

Mr Mason said: “It is a cash in hand, cash in pocket fraud.”

The prosecutor said work by HMRC officers showed card sales had been going into the company bank account, however, cash sales were not being declared.

Mr Mason said the fraud committed was a “very simple device”.

Some of the cash sales were put into Khaled’s private bank account, while some of it could have been used to directly fund his lifestyle, the court heard.

HMRC officers obtained business documents and were able to find sufficient evidence to prosecute for tax evasion.

The court heard Khaled kept a second record of the company’s takings in a blue book.

Mr Mason said this blue book showed the defendant had knowledge of what the business’s profits should have been but he did not question figures produced by his accountants, who had not been provided with all of the business’s sales.

“This blue book is never given to the accountants,” said Mr Mason. “It is never offered up to HMRC.”

Mr Mason said this blue book evidence went against any suggestion Khaled was a “naive director”.

The defendant was due to stand trial on Monday, June 28, however, he entered guilty pleas to charges of fraudulent evasion of around £69,000 in VAT and £40,000 in income tax.

Both crimes related to the 2016 and 2017 tax years after the defendant took over Cafe Spice in May 2015.

Mitigating, Mark Seymour said Khaled’s running of the business was the only time he had been a director or directly involved in the management of a company.

“What you are dealing with here is a relatively straightforward and unsophisticated case where there has been a failure to account properly for the cash flow,” said Mr Seymour.

The defendant, who now works as a taxi driver, was very sorry for what he had done and it will not happen again, said his barrister.

Mr Seymour asked the court to consider a suspended sentence and this approach was taken by Recorder Robin Sellers.

The judge said it was a “classic sales fraud” which was “difficult to view any other way”. He added: “A classic case where there is a second set of books.”

Khaled received a 12-month prison sentence, suspended for 18 months. He was required to complete 100 hours of unpaid work and pay £1,800 costs. He was disqualified from being a director for six years.

“This wasn’t a particularly sophisticated fraud,” said the judge.

“Some could say it was quite brazen. It sticks out like a sore thumb.”

In a statement after the hearing, a HMRC spokesperson said: “The vast majority of people pay the right taxes at the right time, but Sharif Khaled committed fraud by lying about the VAT and Income Tax he should have paid to HMRC.

“Tax fraud is not a victimless crime. It steals funding from our vital public services. If you suspect anyone of tax fraud, you can report them online or by calling our Fraud Hotline on 0800 788 887.”