Prominent local hospitality figures admit role in massive Glasgow restaurant tax fraud

Khalid Javid, 67, was the pair's accountant. He was due to stand trial today for his involvement in the fraud, but plead guilty.

Carbajosa and Campbell misrepresented the value of the sales made at their restaurants and takeaways across Glasgow in order to profit from the scam.

Javid was instructed through his K.A Javid & Co firm to act as an accountant for the business where he created VAT returns, PAYE, Companies House filings and corporation taxes.

HMRC discovered the fraud after investigating inconsistencies between two businesses ran by Carbajosa and Campbell. Forensic accounting from the resulting operation between August 2012 and October 2016 uncovered the almost £700,000 fraud. Among the findings, it was discovered that businesses selling sushi takeaway food which required no VAT had 20% tax added.

Javid will face sentencing next month after it was deferred pending background reports.

Carbajosa and Campbell were sentenced in July last year, however reporting restrictions were in place due to Javid’s impending trial.

The fraud encompassed ten different corporate vehicles under the control of Carbajosa and Campbell. Lord Young, sentencing the pair last year, called the fraud “planned and relatively sophisticated”. He added the scam gave their businesses a competitive advantage over other restaurants who accounted for their VAT obligations.

Lord Young said he accepted the pair had proposals in place to repay the defrauded sums and that they seemed ‘genuinely remorseful’.

Lord Young said that only a custodial sentence was “appropriate for a fraud of this length and value”. He highlighted that had they not plead guilty, Carbajosa and Campbell would have faced longer sentences.

In the nine years that followed the fraud being uncovered, the pair operated businesses around Glasgow. Lord Young stated that because of this the pair would not be disqualified from running businesses.

He said: “I have not found this an easy decision. Ultimately I am satisfied that, as the offending is not recent in time; that you have operated your businesses since 2016 in, as far as I am aware, compliance with statutory obligations; and your remorse is genuine, it is not necessary to make disqualification orders to protect the public.”

Prosecutor Wojciech Jajdelski said: "Carbajosa and Campbell did not comply with the VAT requirements in order to profit, in the longer term, from their restaurant businesses by not accounting for all of the VAT due to HMRC.

"As a result of not all VAT due being paid to HMRC, the companies were more profitable than they would otherwise have been.

"The companies were able to finance their commercial activities, including payments of staff wages, out of the sales income part of which ought to have been accounted for HMRC."Carbajosa and Campbell were also able to take more money out of the companies as their personal income than they otherwise would have been able to do."

Mr Jajdelski said: "In relation to two of the companies, Mr Javid recklessly made statements in the relevant VAT returns which were false."