Suspended sentence for bankrupt who defrauded HMRC
Former Chinese takeaway owner Zhang Jin Chen sold his house in Portsmouth and spent money from the sale in shops such as Apple and Burberry
Chen knew he owed HM Revenue and Customs (HMRC) more than £43,000 in VAT at the time he made the purchases and other cash withdrawals
The 51-year-old then filed for bankruptcy, claiming he only had £20 in his bank account
A former Chinese takeaway owner who withdrew thousands of pounds from his bank account and bought items from shops such as Apple and Burberry instead of settling his tax bill has been sentenced.
Zhang Jin Chen owed HM Revenue and Customs (HMRC) more than £43,000 in VAT when he sold the house he owned with his then wife in Portsmouth in the autumn of 2020.
However, Chen disposed of £107,550 of his proceeds from the house sale without paying HMRC back.
The 51-year-old then applied for his own bankruptcy the following summer, claiming he only had £20 in his bank account, and £100 in cash.
Chen, of Havant Road, Portsmouth, was found guilty of fraudulently disposing of property as a bankrupt under the Insolvency Act 1986.
He was sentenced to 12 months in prison, suspended for 18 months, at Portsmouth Crown Court on Friday 16 May.
He was also ordered to complete 150 hours of unpaid work and 10 days of rehabilitation activity.
Mark Stephens, Chief Investigator at the Insolvency Service, said:
Zhang Jin Chen had the money available to pay the VAT he owed to HMRC twice over following the sale of his house but chose not to do so. Instead, he withdrew huge sums of money in cash and made purchases from the likes of Burberry and Apple.
Individuals who are declared bankrupt commit a criminal offence when they put assets out of the reach of creditors in the five years leading up to their bankruptcy.
Chen clearly intended to conceal his affairs and defraud HMRC so he could be more than £100,000 better off, instead of little over £60,000 if he had paid his debts.
Chen ran a Chinese takeaway called Fortune House from an address on Albert Road in Portsmouth. He registered Fortune House as a business with HMRC in February 2012 but did not register it for VAT.
HMRC officials visited the takeaway in February 2020, finding evidence that Fortune House should have been VAT registered since December 2012.
Chen applied for bankruptcy in July 2021, stating that he knew he owed HMRC £43,876 in VAT but that he could not repay the debts.
However, in October 2020, Chen and his ex-wife sold their jointly owned house on Garnier Street in Portsmouth.
Over the next two months, Chen withdrew his proceeds of the sale in cash, the largest of which were two withdrawals of £30,000 in November 2020.
He also spent more than £3,500 on Apple products in November and December 2020 and a further £880 on a purchase from Burberry nine days before Christmas.
Chen signed a five-year Bankruptcy Restrictions Undertaking in March 2022 restricting him from being able to borrow more than £500 without disclosing his bankrupt status.
The restrictions also prevent him holding certain roles in public organisations.
The Insolvency Service is seeking to recover the funds under the Proceeds of Crime Act 2002.
