Carousel tax fraudster loses £90m court appeal

The mastermind of one of the UK’s biggest ever carousel tax frauds has lost his appeal against a court order to pay back more than £90m gained through his criminal activity.

Sock manufacturer Arif Patel, from Fulwood, Preston, was the head of an organised crime group based in the city.

He and his criminal gang tried to steal £97m through VAT repayment claims on false exports of textiles and mobile phones.

They also imported and sold counterfeit clothes that would have been worth at least £50m, had they been genuine.

In 2023 Patel was given a 20-year jail sentence but has not served a day of his sentence and today he remains at large in Dubai.

The proceeds of the crimes funded a property empire, including commercial and residential premises in Preston and London, bought through offshore bank accounts and companies. He also owned property in Morocco, the United Arab Emirates, Saudi Arabia and Turkey.

Last year a judge at Chester Crown Court ruled more than £90m of his restrained property assets should be sold – with the money returned to fund UK public services. His Ferrari 575 Superamerica was also restrained for sale at auction.

Despite being on the run, Patel was able to bring a case to the Court of Appeal in London, arguing the sum was excessive and he did not have assets to cover the amount.

The Crown Prosecution Service has confirmed the appeal was unsuccessful, with the court dismissing his legal team’s arguments.

Arif Patel and his co-accused, Mohamed Jaffar Ali, 61, of Dubai, were found guilty in their absence of fraud and money laundering offences following a 14-week trial in 2023.

The convictions followed a joint investigation between HM Revenue and Customs (HMRC) and Lancashire Police, which also secured jail sentences totalling more than 116 years for 24 other gang members.

Speaking after the confiscation order last year, Richard Las, director of HMRC’s Fraud Investigation Service, said: “Arif Patel lived a lavish lifestyle at the expense of the law abiding majority, but he will now lose the property empire he amassed from the proceeds of crime.

“Our work never stops at conviction. For the past two years we have worked with police and CPS partners to secure one of the biggest criminal confiscations we have ever recovered.

“Tens of millions of pounds of stolen money will now go back to directly fund public services.”    

Mark Winstanley, Lancashire’s assistant chief constable, said: “Arif Patel was the head of a Preston based organised crime group responsible for causing millions of pounds worth of losses to multiple companies.

“His actions, motivated by greed, directly impacted on the taxpayer. A multi agency operation involving Lancashire police and HMRC has worked tirelessly to bring confiscation proceedings to this point.

“The confiscation order granted for £90m will ensure funds are returned to the public purse thereby recovering his criminal gains.

“Lancashire Police is committed to ensuring crime doesn’t pay and will pursue every avenue to recover monies and assets from those that seek to exploit others for their own gain.”

Arif Patel’s Preston based company Faisaltex was the heart of his criminal empire. From there, he ran the counterfeit clothing import operation and false export business.

He travelled to Dubai in July 2011 and failed to return. He was tried in his absence at Chester Crown Court where he was found guilty of all charges in April 2023.

Co-defendant Mohamed Jaffar Ali was found guilty of conspiracy to cheat the public revenue and money laundering. They were sentenced in their absence to a total of 31 years in prison.

Twenty four other people were convicted during five trials between 2011 and 2014 with a total of 116 years and seven months' imprisonment handed down, a total of 135 years in directors’ disqualifications and three Serious Crime Prevention Orders issued.

Carousel fraud is a complex scam where criminals create chains of fake business transactions to steal VAT repayments. Goods are moved between different companies in a circular pattern, creating false export and import records that criminals use to try and claim large sums back from tax authorities.

Patel's criminal empire was uncovered in a series of raids that took place in 2008, following a lengthy investigation by HMRC and Lancashire Police.

A BBC investigation last month reported attempts to extradite Arif Patel from Dubai had failed.

The Prime Minister's anti-corruption champion Dame Margaret Hodge told the broadcaster: “I think this is a shocking story of somebody who deliberately acted fraudulently and laundered money and he should be punished.

“He should not be beyond the reach of the British justice system.”

A spokesperson for the Crown Prosecution Service in London told Lancashire Business View they could not comment on any extradition process to return Arif Patel to the UK 'as we have a neither confirm nor deny approach'.