A company director from Knightsbridge who claimed to trade in designer jeans from the USA has been jailed for five years after being found guilty of attempting to steal £1 million in tax.

Harrow and Oxford educated Sheel Khemka used false names and fake invoices to claim he was selling millions of pounds worth of expensive designer jeans in a crime described as “a sophisticated and well-planned fraud”.

The 42-year-old, from Cadogan Place, set up 12 companies and used them to front his scam. In fact, he only made three importations, worth £24,000, using the same jeans each time he attempted to claim VAT back from HM Revenue and Customs (HMRC).

He was found guilty by unanimous verdict at Croydon Crown Court on May 11 and jailed for five years. He was also banned from operating as a company director for seven years, and the money he fraudulently obtained has since been paid back.

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Khemka submitted 12 VAT repayment claims between May and October 2009, receiving almost £498,000 in refunds. A further 11 claims totalling more than £500,000, submitted during 2009, were not paid out by HMRC.

Alan Tully, assistant director of Fraud Investigation Service for the HMRC, said: “Khemka set up this fraud through greed, to fund a lavish lifestyle at the taxpayers’ expense. Using the proceeds of his crime he bought a luxury home in Gloucestershire and a top-of-the-range Mercedes car.

"If he had not been stopped by HMRC officers he would have stolen millions of pounds of VAT.

“This was a sophisticated fraud that involved detailed planning and forgery, all for the benefit of one criminal.”

Khemka located his sham business premises in London and across various English counties, often renting office and warehouse space at short notice just before a visit by HMRC to check the repayment claims.

The small quantity of designer jeans actually purchased from the United States were moved from business to business, with new packaging and labels, in an attempt to show that they had just been imported.

"Khemka printed fake invoices, sales orders and other documents shortly before each meeting with HMRC, and even asked innocent local accountancy firms to sit in on the visits, to add legitimacy.

The fraud was uncovered after investigators became suspicious about his trading activity and VAT claims. He was arrested in London in November 2011 and later charged with cheating the public revenue. At the time of his arrest Khemka told HMRC officers that he held no business records.

His Honour Judge N J Ainley, said: “The scheme was dishonest from the start. I have severe doubts if jeans existed at all and you set up companies using the hijacked identities of friends.

"This was a sophisticated and well-planned fraud from which you used a lot of money on yourself - £200,000 to buy a house.”

People suspected of committing VAT fraud can be reported by calling 0800 59 5000.