UK antique jewelry dealer jailed, accused of $2.5M tax fraud

Operation Greenlight photo of antique jewelry dealer and alleged tax cheat Jonathan Uri Shohet. Image courtesy of Her Majesty’s Revenue & Customs.

BALDOCK, England – An antique jewelry dealer who, according to British authorities, fraudulently claimed over £1.6 million (US$2.58 million) in Value Added Tax (VAT) repayments has been jailed. Her Majesty’s Revenue & Customs (HMRC) agents say Jonathan Uri Shohet, 45, of Baldock, Hertfordshire, England perpetrated the fraud by creating fake invoices for expensive Rolex and Cartier watches.

Shohet allegedly used stolen invoice books and fake invoices to claim back VAT from HMRC but had never purchased many of the watches he claimed repayments for.

Martin Brown, HMRC’s assistant director for criminal investigation, said: “We want to make it clear to people who think that it is acceptable to defraud the tax system that tax fraud is a serious criminal offense. Shohet tried to play the system so that he could fund a lavish lifestyle. He made great efforts to hide his crime, but despite his best efforts our investigators were able to unravel his scam.”

HMRC suspicions were raised when officers discovered a number of large cash purchases – some as much as £80,000 ($129,000) – while checking Shohet’s business records. However, when the purchases were checked with the well-known companies that were supposed to have supplied the high-value antique watches, investigators found that some of the transactions had never taken place. In addition, Shohet used many legitimate invoices to reclaim the VAT back a second time.

During dawn raids on Shohet’s home address and business premises officers removed over 60 bags of documents, four laptops and two iPads. At the business in Gray’s Antique Market in London’s West End, a safe was seized inside which officers found a number of illicit invoice books from several watch retailers. The invoice books were forensically analyzed, and Jonathan Shohet’s fingerprints were positively identified.

Jonathan Uri Shohet was arrested on the Oct. 4, 2011 at Heathrow Airport as he arrived back in the UK from Dubai. He was carrying £17,000 ($27,400) in cash, which was seized. He later admitted to HMRC investigators that he had accrued large debts, through a combination of bad business decisions and maintaining an expensive lifestyle.

VAT is a form of consumption tax imposed on the end user, or consumer, of a product, material or service. Businesses are able to recover VAT on the products and services for which they have paid in order to produce further goods or services that will be sold to yet another business in the supply chain or directly to a final consumer. In this way, the total tax levied at each stage in the economic chain of supply is a constant fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business, rather than by the state. Value added taxes were introduced in part because they create stronger incentives to collect than a sales tax does.

“Anyone with information about individuals or businesses involved in [VAT] fraud can contact us on the tax evasion hotline on 0800 788 887 or via our website at www.hmrc.gov.uk/tax-evasion,” said Assistant Director Brown.

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ADDITIONAL IMAGE OF NOTE

Operation Greenlight photo taken during a raid of Jonathan Uri Shohet’s business records. Image courtesy of Her Majesty’s Revenue & Customs.