Mr Scragg was convicted of the fraud last year, but the case has only now been publicised due to reporting restrictions. Between April 2007 and February 2008 his company Moya Payroll Services, was involved in stealing between £8-£10 million, from several construction firms in the region. Instead of passing tax and national insurance payments to the HMRC, they submitted false expense claims, which were tax free.
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Steve Murphy, General Secretary of construction union UCATT, said: "This high profile case is just the tip of the iceberg. The loss to the Treasury, from the various scams existing in the construction industry is astronomical. All of the practices are highly dubious, although some are currently legal."
In 2008 a report for UCATT estimated that false self-employment in the construction industry was costing the Exchequer £1.7 billion per annum. Despite the recession that figure is expected to have risen due to a lack of enforcement by the HMRC. Also in recent years there has been a plethora of other schemes established, all of which are designed to minimise the amount of taxation that is paid by construction companies to the HMRC.
Mr Murphy, added: "This case needs to serve as a wake-up call to the Government. There is no point in tinkering to try to ends these scams. Root and branch reform is needed to end the casualised nature of the construction industry, which allows for these highly dubious practices to flourish."
(CD/GK)
