Two directors of a recruitment agency who stole more than £245,000 by pocketing their employees’ tax and National Insurance Contributions (NICs) and failing to pay their VAT bills have been sentenced.

Mahmud Hussain, 44, and Iftekhar Rehman, 28, both directors of One Stop Recruitment (Nationwide) Limited, used the Pay As You Earn (PAYE) system to deduct Income Tax and NICs from their employees’ wages, but instead of paying the money to HM Revenue and Customs (HMRC), they pocketed the cash. An HMRC investigation into their tax affairs also revealed they hadn’t paid employer NICs or VAT, using the money to buoy up their business.

Paul Barton, Assistant Director, Fraud Investigation Service, HMRC, said:

“Hussain and Rehman used their employees’ tax and National Insurance to fund the business at their expense. In addition Hussain and Rehman failed to pay the VAT that was owed, giving them an unfair advantage over their competitors and other honest businesses that pay what is due.

“This fraudulent behaviour is never acceptable and HMRC will work to bring to justice anyone involved in this type of criminality.”

Mahmud Hussain was today jailed for 15 months and Iftekhar Rehman was given 41 weeks in prison, suspended for 18 months, as well 300 hours of unpaid work.

Hussain and Rehman, who traded as One Stop Recruitment (Nationwide) Limited, provided factory workers and labourers for seasonal work. The pair, who based their business in Whittlesey in Peterborough, were caught after HMRC officers visited their premises to inspect business records. The officers found payroll details for 150 employees, who wrongly thought that their tax and NICs totalling £127,033 had been paid to HMRC. Further investigations also found that £118,311 was owed in unpaid VAT.

Confiscation will be sought to recover the proceeds of their crime.