Three former directors of Anton Group are beginning prison terms after being sentenced at Southwark Crown Court for their part in a £3.1 million fraud.
John Knight is to serve three years in prison and is disqualified as a director for seven years; Stephen Knight received a 28 month term and is disqualifies for five years; Brian Thomas was also sentenced to 28 months and a four year disqualification. In addition, Paul Murphy received a two year prison sentence suspended for two years and a three year disqualification and Philip Sach also received a suspended sentence of ten months, suspended for 12 months. Murphy will perform 150 hours of unpaid community work.
The five were involved in a complex eight year fraud that was uncovered after investigation by HM Revenue & Customs. Some of the directors had conspired to keep cash payments for waste paper ‘off record’ and did not declare it for Corporation Tax, Income Tax or National Insurance Contributions. This amounted to cheating the public purse of £3.1 million, the court heard.
The fine also received significant non taxed, off the record payments from Anton Group. This was uncovered during the investigation by HMRC. It began with suspicions about a deal with a local recycling business and suspected evasion of Corporation Tax through non disclosure of payments for waste paper.
The inspectors were initially told that waste paper was supplied in exchange for the installation and upkeep of handling machinery. They found, however, that money had changed hands, with Anton Group receiving cash payments for the paper. The cash payments were handled by chief executive John Knight and production director Stephen Knight between 2004 and 2012.
A further 90 fake invoices, amounting to around £1.4 million were also discovered in the company accounts. These had been declared as payment to suppliers, but instead the funds ended up in the directors’ personal bank accounts and were used to repay directors’ loans owed to the company.
While the clandestine payments were underway, staff were told that pay cuts were needed to help cashflow and keep the company afloat with the directors agreeing to forego £5,000 of their own salaries a month. But, unknown to the employees, the five were stealing huge sums to line their own pockets.
Adam Kingsgate, assistant director, Fraud Investigation Service, HMRC, says: “This was a high value and complex fraud involving a group of callous fraudsters who had no care for the impact of their crimes on others. They were complicit in almost running the business into the ground and leaving hundreds of people without jobs.
“HMRC is committed to taking action all those who steal from the public purse. Fraudsters who use sophisticated methods to hide their criminal proceeds should know that we are more than a match for them. No tax evader is beyond our reach.”
John Knight, 74, pleaded guilty to cheating the public purse, through non payment of Corporation Tax and VAT, through filing to declare income from the sale of waste paper and plates; and failure to declare Income and NIC due on payments made to directors and employees of Anton Group. He was found guilty on charges of evading Corporation Tax by concealing the true value of directors’ loan accounts.
Stephen Knight, 67, pleaded guilty to two charges relating to the sale of waste paper and plates and of failing to declare payments made for the remuneration of directors and staff.
Brian Thomas,70, pleaded guilty to three charges alongside John Knight.
Paul Murphy, 58, was found guilty of cheating the public revenue by concealing the balances of directors’ loan accounts and of cheating the public purse by failing to declare payments made for the remuneration of directors and employees.
Philip Sach, 53, pleads guilty to fraudulent evasion of tax.
All five resigned as directors of Anton Group on 1 October 2014 when it was sold to an Employee Ownership Trust. The company ceased trading less than three years later 5 April 2017.
By Gareth Ward
HM Revenue & Customs inspectors started to investigate after becoming suspicious about trading in waste paper with a local recycling business. They found undeclared and hidden payments resulting in the public purse being out of pocket in a complex fraud that lasted eight years.