VAT story behind a pay wall - is there much more detail?
A Conservative mayor was an adviser to a company that was implicated in a large-scale VAT fraud and later accepted a £15,000 donation from the business.
Ben Houchen, who
increased his majority in the Tees Valley, faces questions over his involvement with Askaris International Technology.
In 2013 the company tried to claim VAT refunds totalling nearly £810,000 but was blocked by HM Revenue & Customs because the transactions were part of a chain identified as “missing trader” fraud. Last year a judge rejected an appeal and said that “Askaris both knew and should have known that its transactions were connected with the fraudulent evasion of VAT”.
The company began trading mobile airtime minutes in the summer of 2013 and recorded a turnover of more than £4 million within six months. It had one supplier and one customer, and a tax tribunal criticised a “startling” lack of written evidence, ruling that it appeared to pay little attention to negotiating prices and maximising profits from the trades.
Houchen is named in last year’s legal judgment as having “been the adviser to Askaris prior to . . . being elected Tees Valley mayor” and was the director of a legal consultancy criticised by HMRC for allegedly trying to run up costs.
Missing trader intra-community (MTIC) fraud takes advantage of EU rules which allow trading between member countries to be VAT-free. Fraudsters use a chain of companies to make transactions, with one company charging VAT to a customer which a later entity seeks to reclaim from HMRC. It is known as missing trader fraud because when HMRC seeks the VAT from the seller, the trader has disappeared.
Houchen, 34, a solicitor, began working as a consultant to Askaris and other businesses owned by the same Dubai-based businessman in early 2015, after the disputed transactions had taken place but before HMRC had made its decision to not pay the claimed tax.
He was involved with the company, and key figures in it, as the case progressed, raising questions about his business associations and judgment in the years immediately before his election as the first mayor of Tees Valley.
Houchen worked on the legal case via a non-regulated law firm called RU Licit which was set up by Askaris’s owner. It was an arrangement a lawyer for HMRC described as a “breathtakingly brazen” attempt to run up costs which it apparently hoped to claim back from taxpayers.
In 2016 he went into business with a key figure in the disputed transactions. Benham Azadi had arranged the sale of airtime and a tribunal judge later ruled that he had deliberately sought to hide Askaris’s activities from HMRC.
Houchen solicited a £15,000 donation from Askaris in 2019, a few months before the company’s unsuccessful appeal against the withheld tax.
Houchen, who has been described as an ally of Boris Johnson, first entered politics as a councillor in Yarm in North Yorkshire in 2011 and met Richard Upshall while working as a solicitor at a firm in the northeast of England.
Upshall is a Tory supporting entrepreneur who has met Boris Johnson and who shares photographs of private jets, luxury watches and fast cars on social media. Houchen worked on Upshall’s acquisition of several Pizza Hut franchises and in early 2015 left private practice to work for him as a consultant providing advice on several of the entrepreneur’s businesses.
Upshall said that Houchen had been “consulting across my various businesses from a legal point of view and some strategy type work” including on Askaris. Houchen was subsequently involved in Askaris’s attempt to contest HMRC’s decision to withhold more than £800,000 in VAT refunds, with RU Licit, of which he was a director of, racking up more than £100,000 in costs.
The Tory mayor said he had no involvement in compiling a costs submission for RU Licit and said his “only involvement with Askaris is that I worked for RU Licit as an employee and my work extended only to helping Askaris access legal advice from a leading UK specialist tax barrister about the claim they were bringing against HMRC”.
Houchen subsequently went into business with the man who had arranged Askaris’s mobile airtime transactions, Benham Azari, and accepted a donation from the company in 2019. Houchen said he would “probably not” take another donation from Askaris, adding: “I get donations from elsewhere so it’s not something, I’m not desperate, I don’t need to.”
He said Upshall was a “decent person and he runs a lot of successful businesses”.
Upshall insisted that Askaris had been the “unfortunate party that was caught up in the chain” and said the lack of a criminal prosecution showed he had not known the transactions were linked to VAT fraud. The tax tribunal ruled that he should have been aware of the issues around the airtime transactions but “there is no evidence he had any familiarity with these transactions or the circumstances surrounding them”.
Azadi did not respond to a request for comment.
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