A businessman has been banned from being a director of a company after fraudulently claiming more than £170,000 from HMRC under the Construction Industry Scheme.

Stoyan Petkov Kostov, of Travis Street, Burnley, abused the government’s Construction Industry Scheme by claiming payments totalling at least £170,284 from HM Revenue and Customs for his company Kostov Group Ltd. 

Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HMRC.

The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

On January 10, 2019, Kostov Group Ltd registered under the CIS with HMRC as both a contractor and a sub-contractor.

The firm then submitted CIS repayment claims to HMRC relating to the period April 5, 2019, to January 5, 2020, based on payments allegedly received from a third party contractor company.

This resulted in Kostov Group Ltd receiving payments totalling at least £170,284.

However, during an investigation into Kostov Group Ltd's CIS claims, HMRC reviewed their bank statements and were unable to trace any payments from the third party contractor company.

It later transpired the third party contractor signed an application to strike off the company at Companies House on January 1, 2019, and the company was subsequently dissolved on August 6, 2019.

As a result of their investigation, HMRC obtained an order to have Kostov Group Ltd’s bank account frozen on July 14, 2020, and were able to recoup funds that were held in that account.

Mr Kostov, 28, has never provided HMRC with any books and records to support the CIS claims his firm made and as a consequence the Insolvency Service issued him with a 12 year director disqualification.