Knaresborough takeaway owner spared jail after admitting £50,000 VAT fraud

Razaul Karim, 49, was rumbled following an investigation into his tax affairs relating to his business, the Paragon Indian takeaway in High Street.

Prosecutor Timothy Jacobs said the business had operated for many years and that between 2013 and 2015 it was VAT-registered.

However, at some point in 2015, Karim deregistered the business from VAT after claiming that the business was under the income threshold for paying the value-added tax.

An investigation into the business was duly launched, which was aided by records from two well-known delivery firms which provided services for the takeaway. The records, from August 2019, suggested that the takeaway’s turnover was way over the threshold at which companies should pay VAT.

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Investigators looked into the takeaway’s takings for the years from March 2017 and found that the turnover exceeded the VAT threshold in delivered food alone, discounting purchases made in the shop.

They found that the business’s turnover was just under £130,000, well over the £85,000 threshold. The total amount of unpaid tax was over £51,700.

Police brought Karim in for questioning in May last year when he tried to blame his accountant for the tax irregularities, but he later owned up to the fraud.

Karim, of Lunan Terrace, Leeds, admitted four counts of fraudulent evasion of VAT. The offences spanned more than three years, between March 2017 and April 2020.

Defence barrister Chloe Fairley was spared the need for mitigation after judge Simon Hickey said that because of Karim’s hitherto clean record and otherwise “exemplary” character, he would not be sending him to jail.

He said Karim’s fraud was “out of character” and committed possibly because he was going through financially hard times.

The judge that Karim had demonstrated “clear shame” and remorse and had now “lost your good character”.

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“I know that for a man of your standing and (in) your community, that’s a great penalty,” he added.

Mr Hickey said Karim was a hard-working man who had responsibilities as a father and that at the time of the offences he was “probably” struggling to pay his bills and his employees.

He told Karim: “The authorities will pursue you, rightly, for their money and that’s one of the reasons I wany you on the outside, still contributing, rather than in prison.”

Karim was given a two-year suspended prison sentence and ordered to pay a surcharge to fund victim services.

The judge set a timetable for financial-confiscation proceedings under the Proceeds of Crime Act which will determine how much Karim will repay into the public purse for his fraudulent evasion. The proceedings should be finalised by March next year.

Mr Karim’s wife Kalpana Begum Karim, 46, with whom he ran the business, had been charged with the same offences but denied the allegations. The prosecution dropped all allegations against her and ordered them to lie on court file.