In a recent case in Glasgow, two restaurant owners were found guilty of carrying out nearly a £700,000 VAT fraud scheme. This shocking case highlights the importance of maintaining proper financial records and adhering to VAT regulations.
Two Glasgow restaurateurs were jailed after pleading guilty to large-scale VAT fraud. Antonio Carbajosa (41) and Kevin Campbell (44), involved in the Glasgow Restaurant VAT Fraud Case, ran several Glasgow venues — including Cranside Kitchen, Pickled Ginger, and Halloumi. They admitted fraudulently evading VAT for £682,882 between November 2011 and October 2016.
Their accountant, Khalid Javid (67), also pleaded guilty to submitting false VAT returns on their behalf.
Both owners suppressed their true sales figures and under-declared their takings. This meant their businesses kept cash that should have gone to HMRC as VAT.
HMRC investigators spotted unexplained discrepancies in the VAT returns. An inquiry called Operation Keyholder followed, with forensic accountants examining accounts from 2012 to 2016. The probe confirmed a total VAT shortfall of £682,882.
Three of their companies were never registered for VAT at all — despite having annual turnovers well above the registration threshold.
The two restaurateurs admitted they and their accountant “acted together in a co-ordinated way” to cheat the VAT system. By hiding sales, the businesses appeared smaller. As the prosecutor noted, the companies could pay bills and draw higher wages because they were pocketing VAT that should have gone to HMRC.
Any business expecting to exceed that in a 12-month period must register and start charging VAT. Businesses must also:
Under Section 72 of the Value Added Tax Act 1994, fraudulently evading VAT can lead to:
Penalties are not limited to business owners. Corporate officers and accountants can also be prosecuted — as this case shows with Mr Javid.
HMRC uses automated data-matching and analytics to flag anomalies. In this case, HMRC noticed discrepancies in the VAT returns of two of the businesses, which triggered Operation Keyholder.
Common red flags include:
HMRC cross-checks VAT returns against bank deposits, industry benchmarks, and supplier statements.
At Apex Accountants we help businesses navigate VAT rules and handle HMRC enquiries. Our services include:
Proper guidance can significantly impact the outcome of an investigation, ensuring a smooth process rather than a costly one.
Generally yes. Food eaten on-site is standard-rated at 20%. Some cold takeaway food may be zero-rated, but on-premises meals and drinks are a clear-cut VAT case.
HMRC can backdate the VAT liability. You may owe unpaid VAT, penalties of up to 100% of the amount owed, and interest. Voluntary early disclosure usually reduces penalties; hiding it can lead to criminal investigation.
HMRC understands errors happen. Genuine mistakes may attract lower penalties. But deliberate under-reporting or falsifying returns is treated as fraud. Even reckless inaccuracies carry serious consequences.
HMRC usually tries to recover unpaid VAT through court orders. Businesses should assume they will be held responsible for all unpaid tax.
The case shows that HMRC treats deliberately suppressed sales and false VAT records as serious tax fraud, not ordinary bookkeeping errors. Restaurant owners should reconcile till records, card receipts, cash takings and bankings; declare all taxable sales, including cash sales; retain supporting records; and obtain professional advice promptly if HMRC opens a VAT compliance check.
Deliberate VAT inaccuracies can result in a civil penalty of up to 70% of the potential lost revenue. Where the inaccuracy was deliberate and concealed, the penalty can be up to 100%, depending on the circumstances and the quality of the disclosure. HMRC may also assess the unpaid VAT and charge interest. In serious cases, HMRC can begin a criminal investigation, which may lead to prosecution, fines and imprisonment.
Before a VAT compliance check, restaurant owners should organise till and point-of-sale reports, booking records, card-payment reports, cash records, bank statements, purchase invoices and VAT returns. Sales records should be reconciled regularly so that cash and card takings are fully accounted for. Businesses should retain the records supporting VAT returns and input-tax claims, file VAT returns accurately and on time, and discuss any payment difficulty with HMRC promptly. The business should also ask its accountant to review the records and identify any errors before responding to HMRC.
Business rates relief 2027 raises the small business rates relief threshold to £18,000 of rateable value for retail, hospitality and...
Making Tax Digital (MTD) is a UK government plan to make tax simpler. It’s all about using digital tools to...
The events and entertainment industry is fast-paced, diverse, and financially complex. From music festivals to trade shows and celebrity agencies...
The trading allowance 2027 rules lift the tax-free limit for side hustle income from £1,000 to £3,000, starting on 6...
Electronic invoicing (e-invoicing) is moving from a digital option to a legal requirement in the UK. Following extensive consultation with...
The UK’s Autumn Budget 2025 introduced a major tax change for the private‑hire sector. Since 2 January 2026, large ride‑hailing...
Maintaining accurate and complete records is not only good business practice but also a legal requirement for UK businesses. Following...
A company director preparing to sell a business may face different tax decisions following the Autumn Budget 2026. Meanwhile, sole...
If you’ve missed an MTD quarterly update and are unsure what to do next, the first step is to check...
You need to register for VAT when your taxable turnover goes over £90,000 in any rolling 12-month period, or when...
