Former Chinese takeaway owner handed suspended prison sentence after defrauding HMRC - paying for Apple goods rather than VAT
A Portsmouth man has been given a suspended prison sentence after he withdrew thousands of pounds from his bank account and splashed out on luxury goods instead of settling his tax bill.
Zhang Jin Chen, 51, of Havant Road, owed HMRC more than £43,000 in VAT but instead of settling the bill after selling his house, he withdrew thousands and spent money on luxury items. He then subsequently applied for bankruptcy but was found guilty of fraudulently disposing of property as a bankrupt under the Insolvency Act 1986.
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Chen owned Fortune House on Albert Road which he registered as a business with HMRC in February 2012. However, he did not register it for VAT. A HMRC officer visited in February 2020 and discovered the business should have been VAT registered since December 2012.
Despite knowing that the VAT was owed, he and his ex-wife sold their property in Garnier Road making a profit of £107,550 in 2020, but did not pay it off. Instead Chen withdrew large amounts and then filed for bankruptcy a year later claiming he only had £20 in the bank and £100 in cash.
Mark Stephens, Chief Investigator at the Insolvency Service, said: “Zhang Jin Chen had the money available to pay the VAT he owed to HMRC twice over following the sale of his house but chose not to do so. Instead, he withdrew huge sums of money in cash and made purchases from the likes of Burberry and Apple.
“Individuals who are declared bankrupt commit a criminal offence when they put assets out of the reach of creditors in the five years leading up to their bankruptcy. Chen clearly intended to conceal his affairs and defraud HMRC so he could be more than £100,000 better off, instead of little over £60,000 if he had paid his debts.”
Chen was sentenced to 12 months in prison, suspended for 18 months, at Portsmouth Crown Court on Friday, May 16. He was also ordered to complete 150 hours of unpaid work and 10 days of rehabilitation activity.
Chen signed a five-year Bankruptcy Restrictions Undertaking in March 2022 restricting him from being able to borrow more than £500 without disclosing his bankrupt status. The restrictions also prevent him holding certain roles in public organisations.
The overall amount Chen owed to HMRC was £43,876. The Insolvency Service are seeking to recover the funds under the Proceeds of Crime Act 2002.