VAT fraudster could avoid paying back £2.6m over 'admin error'

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image captionStephen Pigott appeared at Grimsby Crown Court via video link

A music producer convicted of being part of a £40m VAT fraud may escape having to repay almost £2.6m due to an "admin error", a court has heard.

Stephen Pigott, 57, was jailed in 2005 for nine years and in 2007 was ordered to pay back his profits from the fraud.

However, at a court hearing on Friday it emerged the confiscation order was "defective", having seemingly been made "under the wrong legislation".

Judge Peter Kelson QC said it was a "scandal" and demanded further inquiry.

Pigott, formerly of Sheffield, was jailed alongside former New York judge Stacey Haber-Hofberg and two others for conning HM Revenue and Customs (HMRC) into paying out millions of pounds in VAT refunds.

The producer, who has worked with artists including Celine Dion, Rod Stewart and the Pet Shop Boys, was later ordered to repay nearly £1.5m by way of a confiscation order.

Grimsby Crown Court heard that amount now stood at £2.59m as a result of interest, but prosecutor Daniel Penman said it appeared the order had been made incorrectly.

He said Pigott, who was due to be sentenced for remaining unlawfully at large after recall to prison, had paid back about £97,000 to date.

He added that HMRC "does not seek any further enforcement of the order".

'Complete shambles'

Judge Kelson, however, said he would not proceed with the sentencing until the matter was determined and demanded "answers from the very highest authorities".

"I'm being told that there may have been some administrative errors that mean he actually may no longer have to pay the £2.59m, nor have to serve the eight years in default," he said.

"This is a complete shambles, worse than that it is a scandal and I will not let this go until it is resolved."

He said he also wanted to know if the order was not enforceable whether the money paid so far by Pigott must be returned.

Before adjourning the case, he said the public had a right to know if the "remarkable errors" were the result of an "incompetent state and can they be remedied".

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