A FORMER restaurant owner who pocketed almost £40,000 as part of a tax scam has been ordered to repay every penny.
Faruk Mohammed Mahmud – who ran the Nawroz in Potterrow – has been sentenced after HM Revenue and Customs (HMRC) uncovered his fraud.
He deliberately failed to register his business with HMRC but for two years charged customers VAT on their meals at the Kurdish and Middle East Restaurant.
And if the 40-year-old, of Trafalgar Street, fails to make his £700 monthly repayments he will face jail.
Mahmud was caught out after HMRC noticed his “promotional” meals being advertised on a well-known online deals site and began to look into his business affairs.
The investigation also revealed that he had tried to distort his turnover by diverting cash through his personal bank accounts in a bid to avoid getting caught.
Anne-Marie Gordon, assistant director at HMRC’s Fraud Investigation Service, said: “Mahmud was well aware that he should have been registered for VAT, but thought he could cheat his own customers and other taxpayers.
“The money he stole could and should have been spent on vital public services, not as a financial safety net for Mahmud.
“HMRC will not hesitate to investigate someone’s finances, where we have reason to suspect fraudulent accounts.
“He now has to pay the price for his criminal activities.
“VAT fraud is a serious offence and I urge anyone with information about people or businesses involved to contact the HMRC VAT fraud hotline on 0800 59 5000.”
Sheriff Fiona Reith QC, at Edinburgh Sheriff Court, ordered Mahmud to repay every penny of the £38,355.90 Value Added Tax he pocketed or a default prison sentence would be imposed.
Mahmud has already repaid £24,269.00 to HMRC and will pay the balance in monthly instalments.
Mahmud pleaded guilty to the fraudulent evasion of £38,355.90 Value Added Tax contrary to Section 72 of the Value Added Tax Act 1994, at Edinburgh Sheriff Court on Thursday, July 16 last year.
He appeared for sentencing yesterday before Sheriff Fiona Reith QC, who awarded a compensation order totalling £30,190.90 to the HMRC having earlier awarded HMRC £8165.00.
Mahmud will face a default prison sentence if he does not repay the full amount to HMRC.
Mahmud told the Evening News he was sorry for his actions and would pay back the money according to the court order.
He added: “I apologise. This is my first business and I am not experienced.
“I jumped too far. I regret this. I have to pay £700 a month and I will pay all the money back.
He added: “I have learned my lesson. I would like to thank my solicitor and the judge.”