Key Facts
- •Jian Heng Liang (appellant) pleaded guilty to conspiracy to commit fraud and forgery related to inflating sales figures of Hotcha Ltd, a fast-food chain, to secure a loan from Beechbrook Capital LPP.
- •Muhammad Farqan Farooka (applicant) was convicted of being concerned in the fraudulent evasion of VAT, also relating to Hotcha Ltd's financial dealings.
- •Liang's sentence of 4 years 4 months' imprisonment was appealed, and Farooka's application for leave to appeal against conviction was renewed.
- •The fraud involved inflating sales figures, creating false invoices, and forging a resignation letter.
- •The prosecution case against Farooka was that he knowingly participated in creating false invoices to reclaim VAT.
- •Farooka's defense argued there was no case to answer because it was unclear whether Hotcha Ltd was owed more VAT than claimed, citing R v Noble.
Legal Principles
Sentencing for fraud should consider culpability, harm caused, and personal mitigation.
Sentencing Guidelines, case law
Double-counting aggravating factors during sentencing is inappropriate.
Case law (implied)
Section 72 of the Value Added Tax Act 1994 defines fraudulent evasion of VAT, including obtaining VAT credit.
Value Added Tax Act 1994, s.72
To convict for fraudulent evasion of VAT, the prosecution must prove the defendant knowingly participated in obtaining a VAT credit to which they were not entitled; the overall VAT position of the company is irrelevant.
Interpretation of Value Added Tax Act 1994, s.72, and case law (R v Noble distinguished)
Outcomes
Liang's appeal against sentence was allowed; his sentence was reduced from 4 years 4 months to 40 months (3 years and 4 months).
The judge double-counted aggravating factors and insufficiently considered personal mitigation when sentencing.
Farooka's application for leave to appeal against conviction was refused.
The court found sufficient evidence to support the conviction, holding that the overall VAT position of the company was irrelevant to the offense of fraudulently obtaining a VAT credit under section 72 of the Value Added Tax Act 1994.