A BUSINESSMAN fraudulently reclaimed £197,783 on VAT he claimed to have paid for machinery he purported to have exported.

But it emerged Joseph Raynor could have avoided a prison sentence if he had owned up to his activities earlier, as he spurned the opportunity of going through civil channels to repay the outstanding money to the Treasury.

Instead HM Revenue and Customs pursued his case through criminal channels leading to his prosecution at Durham Crown Court.

Raynor, 61, of Hermitage Gardens, Chester-le-Street, admitted fraudulent evasion of tax and furnishing false documents, both in contravention of the VAT Act of 1994.

The court heard he ran three international export companies from his home, supplying power products to industrial concerns in Africa and Malaysia.

Hal Watson, prosecuting, said the offending spanned six years to 2010, relating to VAT claimed back by Raynor for products he purported to have sourced in the UK and exported outside of the EU.

Had the claims been legitimate, for genuinely exported goods, he would have been entitled to reclaim the initial VAT paid in making the purchase in the UK.

But Mr Watson said it emerged the claims were made over sham sales, backed up by bogus invoices with counterfeit shipping papers in support of his applications.

Mr Watson said money was also transferred between Raynor’s three companies to further appear as if payment was being made for the exported power products.

“The prosecution can’t say if it was fraudulent from the off, namely we don’t have the records to prove it," he said.

“But he knew it was operating fraudulently and the prosecution would say they were set up exactly for that purpose.”

Mr Watson said when he was interviewed following his arrest in 2013 Raynor made largely ‘no comment’ responses.

Nicholas Rook, mitigating, said the defendant, a man of previous good character, felt like a burden was lifted from his shoulders after it came to light.

Mr Rook said Raynor was initially trading legitimately, but after taking out a loan from overseas in 2002 following a marriage break-up, he got into, a precarious financial position.

He was unable to meet repayments and resorted to the fraud after threats were made to him and his family.

Mr Rook said Raynor felt his life had become “a living hell”, but he was eventually able to complete the repayments.

Jailing him for two years, Judge Simon Hickey described it as, “a sophisticated and sustained fraud.”

He added that it only became a criminal matter because Raynor declined the opportunity to co-operate in the making of what is known as a “contractual disclosure”, which would have seen it remain a civil procedure.