Manager accused of tax dodge

Michael Kirk
Michael Kirk

A WIGAN man has been accused of a £640,000 tax dodge by lying to Customs about the origin of cheap Chinese-manufactured parts smuggled into the country.

Sales manager Michael Kirk, of Middlecot Close, Orrell, is in the dock of Croydon Crown Court with his boss, John Sutton, of Widnes-based steel pipe firm Ashby Scott.

Kirk, 42, and 64-year-old Sutton of Crediton, Devon, deny being knowingly concerned in the fraudulent evasion of duty payable on goods said to be from Japan between January 1, 2003 and July 31, 2006, and goods said to be from India between February 1, 2006 and January 31, 2008.

Ashby Scott Ltd is also being prosecuted, and company director Sutton entered not guilty pleas on the same two charges on the company’s behalf.

The parts were subject to a 58.6 per cent tax – nicknamed “anti-dumping duty” – imposed to thwart importers unfairly undercutting rivals within the EU.

“It’s about smuggling,” prosecutor Julian Christopher QC told the jury. “Smuggling comes in all shapes and sizes and one type is the smuggling of Chinese pipe fittings.”

To protect European manufacturers, the European Commission agreed to impose the tax on carbon steel imports from China.

“The country outside the EU is dumping its products at an artificial price into the EU.”

The court was told between 2003 and 2008, Ashby Scott avoided more than £640,000 duty in relation to 31 importations the defendants claimed had come from Japan and India. Mr Christopher said that none of the duty was paid because the pipe fittings were not sent directly from China, but from Japan and later from India.

But he added: “The anti-dumping duty ought to have been paid.

“You will have to decide whether either defendant knew they were Chinese or thought they were from Japan or India.

“The prosecution say they knew full well they were Chinese.”

The hearing was told the parts were bought from APCO: a Chinese/British venture involving a UK company called TFF International of which Sutton was the managing director and nominated legal representative.

His company had invested $150,000 US into APCO and the Chinese $350,000 US and TFF agreed to handle all the marketing and imports and exports.

Kirk provided the documentation for customs clearance with the full knowledge of Sutton, the prosecution allege.

Mr Christopher said: “Through them the company was operating, and through them it was importing pipe-fittings and dealing with shipping agents.

“The parts were shipped from Dalian, China to Osaka, Japan, then immediately re-shipped to Felixstowe and delivered to Ashby Scott Ltd.

“In every case, the seal number for the first part of the journey was the same as the seal number for the second part of the journey from Japan to the UK. That shows there cannot be any manufacturing in Japan.”

As far as Kirk was concerned, Mr Christopher added: “We will see him dealing with the purchase orders.

“The prosecution say the email communications show he was dealing with China and not the supposed manufacturer in Japan.

“The paperwork he prepared even tried to show the shipping containers were packed in Japan by Gosei Industries.

“That is all part of the smuggling, all part of the fraud.”

The trial is expected to last two weeks.