Randhawa & Ors v R

In sentencing for a sophisticated MTIC carousel fraud, the usual and most reliable starting point is the total identifiable VAT reclaims made or intended, together with the VAT actually repaid. The total value of artificial transactions remains relevant to the conspiracy’s scale, complexity and sophistication. This approach is not inflexible, since unidentifiable reclaims may mean that those figures understate the fraud’s seriousness.

Delay does not of itself require a sentencing reduction, particularly where the fraud’s deliberate complexity has caused investigative and trial delay. Organisers of large-scale fraud may properly receive double-figure sentences. A procedural defect in varying a director-disqualification order need not make the variation a nullity, but may found an appeal.

Five applicants had been convicted at Birmingham Crown Court of conspiracy to cheat the public revenue through an MTIC carousel fraud involving mobile-phone transactions in 2005. Three were convicted following a trial before HHJ Inman QC in June 2010. Two were convicted after a second trial before HHJ Mayo in March 2011.

They applied for leave to appeal their sentences of imprisonment and, in one case, the period of director disqualification. The common issues were whether the judges had overstated the fraud’s scale or the applicants’ roles, whether delay required mitigation, and whether the sentences were manifestly excessive. A separate issue concerned the procedure by which an excessive director-disqualification period had been varied.

1. Appeals allowed in part. Leave was granted and the applications were treated as appeals. Charanjit Chahal’s imprisonment was reduced from 15 to 14 years to achieve parity with Bhabdeep Chahal, whom both sentencing judges had assessed as equally involved. Bhabdeep Chahal’s director disqualification was reduced from 14 to 12 years. The remaining challenges to sentence were dismissed.

2. For MTIC carousel fraud, the value of identifiable VAT reclaims made or intended and the amount actually repaid will generally provide the most reliable sentencing starting point and the best basis for comparison with other cases. Intermediate artificial transactions often cancel out. Their aggregate value is nevertheless relevant to the fraud’s scale, complexity and sophistication. The approach is not mandatory because sophisticated fraud may include successful reclaims not identifiable as linked to the conspirators.

3. The court accepted that the total value of transactions had overstated the most useful measure of loss. On the agreed identifiable figures, and having regard to the conspiracy’s sophistication and the applicants’ leading or pivotal roles, the sentences imposed were within the respective judges’ proper sentencing ranges. Conspiracy to cheat the public revenue is reserved for especially serious cases and may justify a sentence exceeding the statutory maximum for other fraud offences.

4. Delay did not justify a reduction. Applying R v Castillo [2010] EWCA Crim 658, the court held that delay alone was insufficient, especially where the deliberate complexity of the fraud had made detection and proof difficult. The applicants’ decision to contest the trial did not increase their sentences, but did not entitle them to a discount for the proceedings’ duration.

5. The original 20-year disqualification exceeded the statutory maximum under the Company Directors Disqualification Act 1986. Having regard to Shacklady (1987) 9 Cr App R (S) 258 and rule 42.4 of the Criminal Procedure Rules 2011, a procedural error in the subsequent variation did not render it a nullity. It did, however, provide a ground for appeal, and the substituted 12-year period achieved parity.

• Court of Appeal (Criminal Division): In [2012] EWCA Crim 1, granted leave and treated the applications as appeals. Allowed the appeals only to adjust Charanjit Chahal’s custodial sentence and Bhabdeep Chahal’s director disqualification.
• Crown Court at Birmingham: Following trials before HHJ Inman QC and HHJ Mayo, convicted the applicants of conspiracy to cheat the public revenue and imposed sentences of imprisonment and director disqualification.