Former Widnes rugby league club director disqualified over alleged VAT fraud

A former director of Widnes Rugby League Football Club Limited, Stephen Vaughan, has been disqualified from acting as a company director for 11 years following his involvement in an alleged VAT fraud.

Mr Vaughan has signed a Disqualification Undertaking, after enquiries by the Insolvency Services Public Interest Unit into his conduct while a director of the Club. Widnes Rugby League Football Club Limited entered into administration in October 2007 with liabilities of more than 1.6million.

The signed undertaking contained details of alleged carousel fraud carried out by Mr Vaughan, designed to prop up the finances of the rugby league club, which was technically insolvent at the time.

Mr Vaughan arranged for the club to purchase three consignments of clothing from a UK company, and on the same day sold the clothing to a company based in Spain. The transactions appeared to be part of a linked series of purchases between the UK and Europe. Mr Vaughan then attempted to reclaim VAT for the club, however HMRC refused the repayment of the clubs VAT claim on these transactions.

Payment for the goods was made via the First Curacao International Bank, based in the Netherlands Antilles. The bank was closed down by banking authorities when it was discovered that it provided banking facilities to a significant number of companies involved in carousel VAT fraud.

The Disqualification Undertaking states that:

Mr Vaughan caused Widnes Rugby League Football Club Limited to purchase clothing from a UK company, in three transactions worth a total of 2,877,228 plus VAT of 505,265. The clothing goods were sold on the same days of purchase to a Spanish company for a total of 3,002,855. The three transactions took place in June, 2006.These transactions were carried out in a manner which involved Widnes Rugby League Club in Missing Trader Intra Community (MITC) VAT fraud, also known as carousel fraud.He caused these transactions to take place when he knew the club was insolvent.Payment for the goods purchased was not made to the alleged supplier, but was instead made into a third partys bank account in the Netherland Antilles.He failed to inform the other directors of Widnes Rugby League Club of these transactions.He also failed to disclose to other directors a loan of 392,000 made to the club in August 2006.

The Official Receiver of the Services Public Interest Unit in Manchester, Ken Beasley, said:

Carousel VAT fraud is a serious offence which deprives the UK of billions of pounds of tax revenue each year, and the Insolvency Service will investigate any director of a company involved in such actions.

In the last financial year the Insolvency Services Public Interest Unit disqualified 89 former directors whose companies were involved in carousel fraud, with the average period of disqualification lasting 12.5 years.

Mr Vaughans disqualification takes effect on 25 November 2009. The disqualification means he will be banned from acting as a company director, or in any way controlling a company, until 24 November 2020. If he breaches the undertaking he may be prosecuted.

Notes to editors

1. Missing trader intra-community (MTIC) VAT fraud, also known as carousel fraud, involves goods imported VAT-free from other EU Member States being sold through contrived business-to-business transaction chains in the UK, and subsequently exported. The tax loss occurs when the VAT charged on the initial sale of the goods in the UK is not paid to HMRC because the seller disappears. The purchaser can still reclaim the VAT, so the loss crystallises when the trader who exports the goods from the UK makes a repayment claim.

2. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

3. Further information about the work of The Insolvency Service is available from www.insolvency.gov.uk

4. Media enquiries should be directed to: Lisa Miller, Press Office Manager, Telephone: 020 7674 6910 or Ade Daramy, Press Officer, Telephone 02 7596 6187 Insolvency Service, 21 Bloomsbury Street, London, WC1B 3QW.