Seven people involved in a construction industry fraud that cheated the tax office out of £22m have been jailed.

The offenders - six men and one woman - were given sentences ranging from 27 months imprisonment up to nine years and four months, when they appeared at Southwark Crown Court.

The Crown Prosecution Service (CPS) was able to show that the defendants were involved in the setting up of a building construction firm.

The group invoiced customers for the supply of labour which included VAT on the bills.

The customer companies would pay the invoices, but the construction company would not pay the VAT or the Construction Industry Scheme (CIS) contributions to HMRC.

It is estimated there was a loss to the taxpayer of £22m.

The unpaid VAT and scheme contributions were diverted to the bank accounts of the defendants.

The offences came to light when Kent Police arrested Phillip Bailey, from Beechwood Gardens, Meopham, for firearms, theft and money laundering in April 2020.

As part of their inquiries, officers began looking into Bailey’s finances and established he was a criminal accountant.

Bailey set up front companies and bank accounts to divert tax payments away from HMRC.

The companies and accounts were set up in the names of front directors, not his own.

In turn, he would pay off complicit company directors with a portion of the money he made from the scheme.

One of these, was Kevin Ratcliffe, 43, from Longhill Road, Ovingdean, in Brighton, who owned a construction company in Sussex.

Following Bailey’s arrest, Daniel Newton, 37, from Whitefriars Wharf in Tonbridge, became the group’s criminal accountant and carried on its activities in Bailey’s absence.

Bailey, 36, pleaded guilty to conspiracy to cheat the public revenue and conspiracy to disguise, transfer, convert or conceal criminal property (money laundering). He was sentenced to six years and three months.

Newton pleaded guilty to conspiring to cheat the public revenue and money laundering. He was jailed for nine years and four months.

Sean Dean, 41, from London Road, Teynham, was found guilty of conspiracy to cheat the public revenue. He was sentenced to seven years.

Lee Hudson, 56, from Ordinance Way, Ashford, was found guilty of two counts of conspiracy to cheat the public revenue. He was sentenced to five years.

Sarah Gillard, 41, from Beechwood Gardens, Meopham, was found guilty of acquiring criminal property. She was sentenced to two years suspended for two years.

Bradley Mortimer, 39, from Chelsfield Lane, Orpington, was found guilty of participating in activities of an organised crime group and of entering into a money laundering arrangement. He was sentenced to three years and six months.

Ratcliffe, 43, pleaded guilty to cheating the public revenue and one count of acquiring criminal property. He was sentenced to 27 months.

Bailey, Newton, Dean and Ratcliffe were also disqualified from being company directors for 10 years.

It was said Bailey, Newton, and Dean were responsible for establishing the fraud.

Ratcliffe was a customer company director who received ‘kickbacks’ in exchange for providing their business to the core company.

Hudson was an office worker conducting the day-to-day business which enabled the offences.

While Gillard and Mortimer functioned as cash couriers for money laundering for the illicit activities.

Julius Capon of the CPS said: “These criminals stole £22 million from the taxpayer.

“Fake payroll companies were created and operated by Bailey, Newton, Hudson, and Dean.

“Construction companies would permit these payroll companies to make VAT and CIS contributions to HMRC on behalf of their subcontractors.

“Instead of the VAT and CIS contributions being paid to HMRC, the defendants pocketed the monies themselves.

“The defendant Ratcliffe owned a construction firm which received cash ‘kickbacks’ for assisting in this illegal enterprise of cheating the revenue.

“The defendants Gillard (who was the partner of Philip Bailey) and Mortimer laundered the proceeds through their bank accounts.

This money is needed to support our hard-pressed public services

“The CPS has commenced proceeds of crime proceedings to claw back the money they made from this illegal scheme.”

“This is money that is needed to help support our hard-pressed public services.

Ian Hackett led the HMRC fraud Investigation.

He said: “We have worked closely with Kent Police to dismantle this sophisticated and complex fraud.

“The tenacity and expertise of the investigators involved in this joint investigation has protected millions of pounds of taxpayers’ money, which is needed to fund our public services.

“We encourage anyone with information about any type of tax fraud to report it to HMRC online. ”