This is the story of Richard Allen. A music entrepreneur who spent 20 years trying to get justice for himself and his family due to the collapse of his mail-order music business, because he refused to become involved in a VAT scam. The of HMRC to take swift action once Allen provided evidence of tax abuse led to harm caused by maladministration. It should have been an open and shut case for the Parliamentary and Health Service Ombudsman. They took a year to decide there was nothing to investigate. They reframed his complaint, side-stepped the most important aspects and worked hand in glove with a senior manager at HMRC to determine that ‘nothing was wrong’. Closing his case without explanation due to HMRC’s ‘neither confirm nor deny’ policy (NCND), which shields them from all transparency.

Richard Allen saved the treasury at least £90 million in lost revenue per annum, yet received no reward from HMRC. A senior HMRC manager’misled’ Ministers, or as we would call it, lied, to allow the VAT tax fraud to continue. Allen tells the story of his long battle for justice in an articulate blog on his RAVAS (Retailers Against VAT Abuse Schemes) website. His story demonstrates the way in which the government agencies we pay for, to protect our interests, collude together to protect the interests of external third parties. You can listen to his whole story on ‘The Corruption Diaries’ podcast available here or wherever you get your podcasts. It is a fascinating tale of everyday corruption and a sustained effort on his part (and others) to bring all the dirty little secrets out into the public domain. It is a drama waiting to be made.

Here are some excerpts from his blog post ‘Does the Ombudsman really hold HMRC accountable for its mistakes?’

In 2005 I had been running a successful online music mail order business for over a decade. Two years earlier in 2003 I had been approached by a Jersey based logistics company with a scheme that offered my businesses the “opportunity” to avoid paying VAT. The logistics company explained to me that if I set up arrangements to fulfil my UK customers’ orders via Jersey, I could take advantage of an exemption from import VAT called Low Value Consignment Relief (LVCR). Anything with a value of £18 or less (later £15) would then be exempt from VAT on importation into the UK. Since pretty much everything I sold fell within that threshold I wouldn’t have to account for VAT on sales to my UK customers. The only caveat was that I had to set up a company in The Channel Islands and pretend to be running it from there. Furthermore, if a customer ordered multiple items and the total value was above the LVCR threshold the order would have to be split, and each item sent individually to claim the exemption.

In the spring of 2006 with the help of my then MP Cheryl Gillan, I personally handed to HMRC officials in Whitehall a dossier explaining how UK sourced CDs and DVDs were being sent from the UK to the islands and back again, which retailers were involved and how they were splitting orders to gain the exemption. Numerous test purchases were enclosed including releases from my own record label. After I handed over the dossier, I fully expected someone from HMRC to contact me and ask further questions. However, that didn’t happen.  By the Autumn of 2006, as widely reported in the media at the time, virtually every UK music mail order operation of any note had set up fulfilment via The Channel Islands, including the UKs most important music retailer HMV.

Eventually, despite vociferous campaigning on my part and by other retailers, I was unable to end the trade before, in December of 2007, my business of sixteen years collapsed. By this point, having spent two years fighting for survival, I was completely exhausted. I simply could not compete within an online music mail order industry that was now entirely offshore and selling every CD and DVD available in the UK free of VAT. This trade was administered with a Nelsonian blindness by HMRC who appeared to not care that it relied on deception or that it resulted in millions of pounds of VAT being lost for no good reason.

In 2015 I was approached by two retailers, Neven Juretic and Julius Oliveti whose businesses were being impacted by VAT evasion perpetrated by Chinese online retailers. The Chinese retailers were importing goods into UK warehouses (often mis-declaring the value) and then selling them online and not accounting for VAT. The Chinese had no tangible UK presence and any money for sales went straight to China via PayPal. It was textbook VAT evasion on an industrial scale that was losing the UK over £1 billion a year in VAT. I handed a dossier to The Chancellor George Osborne and to the Financial Secretary to the Treasury David Gauke and obtained significant press on the issue including the front page of the Financial Times, a Radio 4 Documentary and an episode of Panorama The Billion Pound VAT Scam.

Then in March of 2017 the Head of Indirect Tax at HMRC wrote a letter that stated I was being considered for a reward along with my colleagues Neven and Julius. However, it transpired that Neven and Julius were each given a £15,000 reward and were told I would not be rewarded. 

And so, in 2022, more out of curiosity than any real expectation of a just, or even coherent, outcome I made a complaint to HMRC. The purpose of the complaint was not to accuse individuals of misconduct or exact revenge but to initiate an investigation into what went wrong and why, so that it would not happen again. I wouldn’t wish on anyone what my family and I went through.

My complaint was summarised by HMRC as follows:

1. HMRC officials permitted and were aware of VAT losses that were neither a consequence of European Union (EU) law nor policy implemented by the United Kingdom (UK) Government relating to Low Value Consignment Relief (LVCR).

2. HMRC officials presented false and misleading information to ministers

3. HMRC acted to silence those exposing their misconduct

4. HMRC’s contention that the abuse of LVCR in the Channel Islands was the result of Government policy is false.

5. HMRC denied a reward to Richard Allen for exposing VAT abuse of online sales that they had paid to others.

In May of 2024, my complaint was referred to the Ombudsman with the assistance of my MP Sarah Greene. The ruling of the Ombudsman was eventually issued in June 2025 and can be summarised as follows: 

Points 1 – 4: Are outside the remit of the Ombudsman because they relate to legislation. The safety net for the behaviour described in the complaint, if true, is the individual members of Parliament and the legislative process.

Point 5 – HMRC has a confidential rewards guidance and the decision to not reward Mr Allen was arrived at by following this guidance, based upon information relating to Mr Allen.

As to the mysterious information that HMRC held about me which was used to determine I was not eligible for a reward The Adjudicator stated that HMRC had informed him that all information about me had been destroyed under GDPR and it was therefore not possible to ascertain why I wasn’t rewarded. Even so The Adjudicator concluded that HMRC had, in all probability, arrived at a fair decision because they were in his view, unlikely to act improperly. However, the Adjudicator’s ruling was by his own admission, based on absolutely no evidence at all. It was pure conjecture, and thus inherently flawed. This wasn’t lost on the Ombudsman who miraculously found someone senior at HMRC who remembered me and gave them the information that HMRC had previously stated didn’t exist. I made a Subject Access Request asking to see this personal information, but the Ombudsman declined to release it, stating instead that it was confidential and that if I was allowed to see it, that would undermine trust in the Ombudsman. Information about myself is, apparently, a state secret.

Nobody has been held to account – even where there is clear evidence of failure – and my rights have been ignored. Not only that but the [PHSO] decision was made by one person – with no external independent appeals process – and it carries weight in a court of law, so a trip to the Ombudsman could hinder any legal action I might wish to pursue…

But there is an issue bigger than all of this. I decided to not participate in tax avoidance/evasion and instead decided to report it. Isn’t that what HMRC wants taxpayers to do? To do the right thing? Yet I now ask myself whether reporting the tax scam was, from a purely selfish perspective, the sensible thing to do? What lesson has HMRC been trying to teach me and my family, who have grown up during this nightmare? Rather than do the right thing should I have instead done the sensible thing, cast my moral compass into the bin, turned a blind eye, and abused the VAT system like everyone else?

Those who suffered harm because of the allowance of The Channel Island trade and those who suffer from similar abuses today, are not being protected. Instead, their rights are either being ignored or traded off against other questionable business interests and policy agendas.

Do read the whole blog post yourself and while you are at it, this coda post from Richard explains how PHSO manage to get any ‘satisfied’ responses submitted to their outsourced Market Research team. Fascinating. Well done, Richard Allen, you fought the system, you paid a heavy price, but you exposed the corruption for all to see.