Edinburgh builder who evaded paying more than £100,000 in tax avoids jail term
A builder who failed to pay taxes to HMRC despite raking in revenue of more than £1.5 million from his customers has been spared a jail sentence.
David John Lee evaded paying more than £100,000 in Income Tax and National Insurance contributions while running two building firms between 2011 and 2016.
Lee, 59, failed to keep proper records of his finances, did not employ an accountant and used a cheque clearing company “to facilitate the fraudulent evasion of tax”.
The self-employed building boss ran up debts with a local supply company that were never paid and was found to be in charge of one business despite his daughter being listed as the sole director. Lee, of Balgreen, Edinburgh, pleaded guilty to evading Income Tax and National Insurance contributions totalling £116, 720.76 when he appeared at the city’s sheriff court last month.
He returned to the dock for sentencing on Tuesday January 27 where defence agent Christopher Fehilly told the court his client was “an extremely good builder but a really poor businessman”.
Mr Fehilly admitted the offence was “a serious matter and the custody threshold has been reached” but said Lee was now in a position to make a £30,000 payment to HMRC.
Sheriff Douglas Keir said: “On any reasonable view your record keeping was completely reckless and indeed criminal and ordinarily I would be minded to impose a custodial sentence and bring and end to this matter today. In one view that would be an easy decision but I accept there is an appropriate alternative to a custodial sentence which encompasses punishment, paying back to the community and paying back to HMRC.”
Lee was sentenced to a community payback order as a direct alternative to custody where he will have to carry out the maximum term of 300 hours of unpaid work within 18 months. He was issued with a restriction of movement order where he will have to wear an electronic tag and stay within his home between 7pm and 5.30am for the next 10 months.
The sheriff also imposed a compensation requirement where Lee will have to pay £30,000 to HMRC within the next 28 day and set down a date for a confiscation hearing to be held next month. Prosecutor Erin Illand told the court Lee started up Build Solutions Scotland in 2009 but only submitted one set of accounts before the firm was struck off in December 2014.
A new company Maxim Contracts Ltd then began operating with his adult daughter as the sole director though the court heard HMRC believed Lee to be the “controlling mind” of the company.
Ms Illand said the tax body believed Lee “deliberately diverted income through his daughter’s bank account” which was “further evidence of Lee’s dishonesty and deception”. The court heard Lee was declared bankrupt in April 2015 and the second firm folded the following year with no accounts ever being submitted.
An HMRC investigation into Lee’s finances discovered 13 customers had paid the builder a total of £1,570,931.82 for work he had carried out between 2011 and 2016. The fiscal depute said: “Payments for work was made directly to bank accounts in accordance with instructions provided by the accused and none of this income was declared to HMRC.”
The investigation also proved Lee had used a Money Service Bureau to cash 44 cheques from customers totalling £191,139.56 despite having “an active working bank account”. Ms Illand said: “The main incentive of using this MSB was to facilitate the fraudulent evasion of tax despite the heavy commission costs incurred.”
Lee pleaded guilty to fraudulently evading Income Tax and Class 4 National Insurance contributions of £116,720.76 between April 6, 2011 and April 5, 2016.