Three men have been jailed for setting up nine totally fictional firms so that they could get away with £300,000 in a VAT scam.

The men set up bogus companies including a clothes manufacturer, a publishing house and a software engineering company and then submitted VAT repayment claims for the businesses, the HMRC said today. However, there was no evidence that any of the firms were doing any trading to make them eligible for the tax rebate, the taxman said.

The three-person gang, with two members from the West Midlands and one from Manchester, were collared after an investigation by HMRC and all pleaded guilty to conspiracy to cheat the public revenue. The Birmingham Crown Court sentenced two of the men to 18 months while the third got three years.

"This case sends a clear message to anyone involved or considering fraud against HMRC - your time is up," said Adrian Farley, assistant director of criminal investigation.

"We are working relentlessly to combat those involved in tax evasion and fraud and bring them before the courts. With over £10 billion being stolen from UK finances each year by criminals, it is serious crime which we are determined to eradicate." ®