A HAULIER’S misguided attempt to keep the business afloat led him to urge his accountant to under declare the company’s VAT liability, a court heard.

Five figures for quarterly VAT returns for Nicholson’s Transport Ltd were “manually adjusted” by bookkeeper James Sobotowski by £132,200.

Durham Crown Court heard that sole director David Nicholson intended to pay back the full sum to HM Revenue and Customs (HMRC) but was unable to do so before the company went into liquidation in July, last year.

Nadim Bashir, prosecuting, said the evasion came to light when the Billingham-based company was subject to a routine VAT inspection in October 2018.

When HMRC officers visited again at Nicholson’s request eight days later, he admitted owing £132,000 in VAT between March 2014 and May 2015.

Nicholson said when told of the VAT amount due each quarter, realising the company could not pay, he asked Sobotowski: “What can you do Jim?”

He said he would agree to paying a reduced VAT sum, but claimed it was always his intention to pay back the unpaid sum, adding: “It was never stolen. It was ‘borrowed’.”

Sobotowski said he was asked to manually adjust the VAT figures if Nicholson told him the company could not afford to pay the full amount in a quarter.

Nicholson, 54, of Middleton Road, Sadberge, near Darlington, and Sobotowski, 61, of Carlton Avenue, Billingham, both of previous good character, admitted fraudulent evasion of VAT.

Simon Gurney, for Nicholson, said the company, incorporated in 1989, struggled following the financial crash of 2007/8 when the bank called in loans.

Mr Gurney said the offence was, “a serious error of judgement” by his client who was trying to keep the business afloat and maintain the jobs of a 50-strong local workforce.

Richard Herrmann, for Sobotowski, said he was merely, “acting on instructions” and stood to gain nothing.

Judge Jonathan Carroll told the defendants: “This was plain and simple evasion, whether or not you intended to pay it back.

“I accept in some way both of you had the aim to pay the money back, but it was deluded and unrealistic.”

He imposed a 22-month prison sentence on Nicholson and 16-months on Sobotowski, both suspended for two years.

Nicholson must perform 180 hours of unpaid work and Sobotowski was given 80 hours, and both will have to pay £525 costs.

Crime proceeds inquiries will now begin against Nicholson.