Organised crime group jailed for pocketing millions in unpaid taxes

Seven members of an organised crime group who pocketed an estimated £22 million in unpaid taxes have been jailed.

A complex investigation by Kent Police and HMRC found the group set up a series of labour supply companies keeping VAT payments from customer companies that should have gone to HMRC for themselves.

Similarly, they also withheld financial deductions from sub-contractors' agreements that should have been given to HMRC under the Construction Industry Scheme (CIS) for themselves.

The elaborate plot came to light when one of the group, Phillip Bailey, was arrested and investigated for firearms, theft and money laundering offences in April 2020. As part of their enquiries, officers began looking into the 36 year old’s finances and established he was a criminal accountant.

Bailey, from Beechwood Gardens, Meopham, was found to have set up agreements with recruited construction and logistics companies. 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, Brighton who owned a construction company in Sussex.

Following Bailey’s arrest in 2020, Daniel Newton, 37, from Whitefriars Wharf in Tonbridge became the group’s criminal accountant and carried on its activities in Bailey’s absence.

Those that benefited from the fraud included:

• Sean Dean, 41, from London Road, Teynham who introduced a large electrical contractor to the OCG and received a 20% cut of the stolen VAT. He also admitted arranging and conducting cash deliveries for the group.
• Lee Hudson, 56, from Ordinance Way, Ashford who worked in the OCG’s offices for five years, ran the payroll and was aware that the 'business' made its money by stealing the VAT and CIS payments. He received a large amount of cash every week in addition to his legitimate wage paid into his bank account.
• Sarah Gillard, 41, from Beechwood Gardens, Meopham is the partner of Phillip Bailey and received over £300,000 from his bank accounts, despite him being in prison. All the money was traced back to the fraud and the group.
• Bradley Mortimer, 39, from Chelsfield Lane, Orpington allowed his bank account, and others under his control, to be used to launder over £2.1 million pounds of the stolen VAT and CIS. Money was transferred into the accounts, and he withdrew it in cash, before handing it to the OCG.

In addition to operating this large and sophisticated fraud, the investigation identified that the group was also running a profitable money laundering scheme for criminal associates. Over £2 million was identified as being linked to a large scale drug supply network across the south east of the UK.

Sentences

• Phillip Bailey pleaded guilty to conspiring to cheat the public revenue and transferring criminal property (money laundering) at an earlier hearing. He was jailed for six years and three months.
• Daniel Newton pleaded guilty to conspiring to cheat the public revenue and transferring criminal property (money laundering) at an earlier hearing. He was jailed for nine years and four months.
• Kevin Ratcliffe pleaded guilty to cheating the public revenue and acquiring criminal property at an earlier hearing and was jailed for 27 months.

The following were found guilty following a trial and sentenced at Southwark Crown Court on Tuesday 4 February 2025 -

• Sean Dean, conspiracy to cheat the public revenue and jailed for seven years.
• Lee Hudson, conspiracy to cheat the public revenue and acquiring criminal property (money laundering.) He was jailed for five years.
• Sarah Gillard, acquiring criminal property (money laundering.) She was jailed for two years, suspended for two years.
• Bradley Mortimer, entering into a money laundering arrangement and was jailed for three and a half years.

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

Web of lies

Leading the investigation was Detective Constable Dameon Shaw. He said: ‘These criminals set up and ran a large-scale operation designed to steal VAT and CIS payments, which were then paid out to themselves and criminal associates. They are now paying the price for their actions with the sentences handed out by the court today. ‘Tax fraud is not a victimless crime; the public rely on the revenue generated by tax to fund essential services. No matter how hard they tried to conceal their illicit gains, our expert investigators were able to unravel their web of lies.’

Ian Hackett, Operational Lead in HMRC’s Fraud Investigation Service, 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.’