20 February 2013 Last updated at 14:37 ET

Greater Manchester directors jailed over £500,000 tax evasion

Two Greater Manchester company directors who hid money in offshore accounts to avoid paying £500,000 in tax have been jailed for fraud.

Roderick Smith, 44, of Standish, and Stephen Howarth, 44, of Gee Cross, failed to declare profits from their IT company held in Isle of Man accounts.

Smith admitted cheating the Revenue and fraud, while Howarth admitted fraud at Liverpool Crown Court.

Smith was sentenced to 15 months imprisonment and Howarth to 12 months.

A HM Revenue and Customs (HMRC) spokeswoman said the pair, who ran Goldlogic Control Systems Ltd - a company offering computer technology to the car trade - had "the opportunity to disclose their offshore accounts through HMRC's Offshore Disclosure Facility (ODF) in 2007".

"Howarth did not register for the ODF, while Smith did register but then disclosed only one of the 12 accounts he controlled overseas," she said.

'Shocked and disappointed'

HRMC inspectors uncovered the fraud after being alerted by tax authorities in Germany, where many of the pair's customers were based.

Investigators found sales totalling £1,255,615 in Germany, while the pair only declared £49,650.

The spokeswoman said the balance had been "siphoned off into the offshore accounts of five shell companies registered in Mauritius and the Isle of Man created by the directors solely for the purpose of tax fraud".

She added that the prosecutions were the first involving the ODF in the UK.

Passing sentence, Judge Robert Warnock said the pair had "cheated the Revenue, and therefore this country, by evasion of income tax".

"The authors of your references will be shocked and disappointed at what in effect were crimes motivated by greed and selfishness," he said.

"Only sentences of imprisonment are appropriate in respect of the offences you have committed [as] to suspend these sentences would offend any reasonable sense of justice on the part of the honest taxpayer."

Confiscation orders were issued against Smith for £300,000 and Howarth for £200,000, with the condition that a failure to pay the money within 24 months would see them receive another 15 months and 12 months in prison respectively.