Stephen Knight (67), John Knight (74), Brian Thomas (70), Paul Murphy (57), and Philip Sach (53) each pocketed hundreds of thousands of pounds of taxpayers cash as part of a complex eight-year fraud that was uncovered following an investigation by HM Revenue and Customs (HMRC).
The five were all directors of Basildon-based printer Anton Group, a £40m-plus turnover company at its peak that fell into administration in March 2017 and ceased trading a month later with a creditors' shortfall of almost £13.4m.
Some of the directors conspired to keep cash sales of waste paper ‘off record’ while they all shared the proceeds, cheating the public purse out of £3.1m in Corporation Tax, Income Tax, VAT and National Insurance Contributions (NIC).
According to the HMRC, during the fraud the directors slashed staff pay, including their own, telling employees that this would assist with cash flow and keep the business afloat. However, while it appeared they had each forfeited £5,000 of their own pay per month, the Knights, Thomas, Murphy and Sach were actually stealing huge amounts of taxpayer money.
Alongside non-taxed off record payments, the five directors received significant payments from the Anton Group, separate from any legitimate forms of payment.
Initial investigations focused on suspected evasion of Corporation Tax due on profits from sales of waste paper bi-product to a local recycling company.
HMRC officers were told that the paper was given to the recycling company free of charge, in exchange for the installation and upkeep of machinery. But investigators found that money did change hands and that Anton Group received cash payments for the waste paper.
These cash payments were controlled by chief executive officer John Knight and production director Stephen Knight, who facilitated regular ‘off record’ payments to directors and employees between April 2004 and November 2012.
Around 90 fake invoices, amounting to approximately £1.4m, were also discovered in the company’s accounts. These had been declared as payments to suppliers, but the funds were siphoned off into the directors’ personal bank accounts and used to repay directors’ loans owed to the company.
HMRC fraud investigation service assistant director Adam Kingsgate said: “This was a high value and complex fraud involving a group of callous fraudsters who had no care for the impact of their crimes on others. They were complicit in almost running the business into the ground and leaving hundreds of people without jobs.
“HMRC is committed to taking action all those who steal from the public purse. Fraudsters who use sophisticated methods to hide their criminal proceeds should know that we are more than a match for them. No tax evader is beyond our reach.”
At Southwark Crown Court today (31 January), John Knight of Ramsden Bellhouse, was sentenced to three and a half years in prison and disqualified a director for seven years, Stephen Knight of Billericay; 28 months in prison and disqualified as a director for five years, and Brian Thomas of Sporle; 28 months in prison and disqualified as a director for four years.
Paul Murphy of Little Baddow was sentenced to two years in prison, suspended for two years, and disqualified as a director for three years while Phillip Sach of Chelmsford was sentenced to ten months in prison, suspended for 12 months.
HMRC said it is pursuing confiscation action to recover the stolen money.
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This is a breaking news story, and more will follow from Printweek’s court correspondent on Monday.
