A South Lanarkshire man has been jailed for more than two years after using a VAT tax fraud to repay more than £180,000 he had previously made as a forger.

John Farrell of Thorntonhall used fake passports and driving licences to set up bogus companies and bank accounts to fraudulently claim £180,591.20 VAT repayments, a HM Revenue and Customs investigation found.

Farrell laundered £75,000 of the money through a bogus Cypriot account before using it to pay most of a £96,000 confiscation order imposed after he was jailed for five years and eight months for running a huge counterfeiting operation at a factory in East Kilbride producing fake banknotes.

He is now facing another 27 months behind bars.

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A Serious Crime Prevention Order (SCPO) is also being sought against Farrell for when he leaves prison. If successful, it would be the first to be imposed on the back of a HMRC conviction in Scotland.

HMRC began looking into the bogus companies after concerns were raised about the VAT claims and an officer visited the 61-year-old who was using the name Andrew Strachan.

However, Farrell’s false identity was exposed when the eagle-eyed HMRC officer recognised him from a newspaper article about the forgery confiscation order.

Cheryl Burr, assistant director for Fraud Investigation Service at HMRC, said: “This was a shocking ploy by Farrell to pocket public money.

"His actions were one of pure greed, so he could lead a comfortable lifestyle in a house worth more than £1million.

"He then had the cheek to use the proceeds of this fraud to repay a confiscation order imposed on him. Rather than repay the public purse, he chose to steal from it.

"The VAT he illegally reclaimed could have paid for the equivalent of seven new nurses in Scotland for a year.

"HMRC will continue to pursue criminals who attack the tax system and we ask anyone with information about suspected VAT fraud to report it to HMRC online or call our Fraud Hotline on 0800 788 887".

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A total of 24 mobiles, laptops, memory cards and false passports were seized when his home was searched in June 2013.

A bag containing a laptop, paperwork relating to the bogus companies, prepaid credit cards and phone sim cards were found hidden in the eaves of the £1m mansion.

A false driving licence in the name of “Andrew Strachan” containing Farrell’s picture was discovered on an electronic device. Farrell was arrested and charged after interview on the same day.

An associate of Farrell’s, Michael Mullen, 41, of Scalloway Road, Cambuslang, pleaded guilty to owning or controlling registered addresses for false businesses to facilitate the commission of VAT fraud and was sentenced to a Community Payback Order and a Restriction of Liberty Order.

Confiscation proceedings are underway.

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