Glasgow Restaurateurs and Accountant Admit VAT Fraud
Two prominent restaurateurs in Glasgow along with their accountant have confessed to participating in a substantial VAT fraud scheme.
Antonio Carbajosa, aged 41, Kevin Campbell, aged 44, and Khalid Javid, aged 67, were apprehended following an investigation by HM Revenue and Customs (HMRC).
Carbajosa and Campbell managed a collection of venues in Glasgow, including Cranside Kitchen, Pickled Ginger, and Halloumi.
The pair pleaded guilty to fraudulent evasion of VAT amounting to £682,882 over the period from November 2011 to October 2016. Both were sentenced to three years in prison for their offenses.
Javid admitted to recklessly submitting false statements through VAT returns for two companies.
Details of the case were withheld until the resolution of Javid's proceedings. Initially scheduled for trial, Javid subsequently pleaded guilty.
Businesses Involved and Coordinated Fraudulent Activity
The court was informed that Carbajosa and Campbell were business partners operating multiple restaurants and takeaways throughout Glasgow.
The companies involved included Cyprus Leisure, Rotunda Leisure, Lookoil, Catering 58, Beachfront, Seaside 41, South Promenade, and La Reguera.
It was established that the two men
"acted together in a co-ordinated way"to underreport the true sales figures of their limited companies.
Javid's accounting firm, KA Javid & Co, was engaged by Carbajosa and Campbell to prepare the companies' VAT returns and manage other financial obligations such as PAYE, corporation tax, and annual filings with Companies House.
Four-Year HMRC Investigation
During the prosecution, Wojciech Jajdelski explained that Carbajosa and Campbell benefited financially over an extended period by failing to declare the full VAT owed to HMRC.
"The companies were able to finance their commercial activities, including payments of staff wages, out of the sales income part of which ought to have been accounted for HMRC,"he stated.
Although some of the businesses sold sushi takeaway items exempt from VAT, the majority of their supplies were subject to the standard 20% VAT rate.
HMRC investigators initially identified inconsistencies in the VAT returns of two businesses.
A forensic accounting analysis conducted between August 2012 and October 2016 concluded that the fraudulent VAT evasion by Carbajosa and Campbell totaled £682,882.
Jajdelski noted that all relevant companies had annual VAT turnovers significantly exceeding the registration thresholds. Three companies were not registered for VAT and failed to remit tax on their sales.
HMRC suffered a loss of £136,576 due to Javid's conduct.
"In relation to two of the companies, Mr Javid recklessly made statements in the relevant VAT returns which were false,"Jajdelski said.
This included inaccurate reporting of sales and output VAT. Additionally, a 20% reduction was applied to all sales figures without a
"proper factual basis".
Sentencing for Javid was deferred pending background reports, with a hearing scheduled for the following month at the High Court in Glasgow. He was granted bail by Lord Young.
