A FORMER tax worker has been jailed after hijacking the identity of a dead man to cover up a £171,000 fraud.

James McGee, 66, made bogus VAT repayment claims as part of a sophisticated ruse.

The HM Revenue and Customs (HMRC) inspector, who worked in Ayr and Paisley, left his job in 2009 after 34 years and was arrested in 2013, when he was found to have two bank cards in the dead man's name.

One of the accounts had been opened after the man died and the other had been credited with some of the fraudulently obtained cash but McGee claimed the deceased was the criminal mastermind behind the money laundering scheme.

Officers who searched McGee’s home seized handwritten paper records containing detailed information on several VAT registered businesses.

Experts later confirmed the records matched McGee’s entries in his old HMRC diaries and notebooks.

McGee was initially arrested as part of a National Crime Agency (NCA) investigation into identity fraud, of which he was cleared.

During a search of his property, officers recovered documents suggesting he was involved in VAT fraud, triggering the HMRC enquiry.

McGee insisted he was not responsible for any criminality but admitted using the hijacked identity when calling HMRC’s VAT helpline.

The group fraudulently obtained money from HMRC, with the proceeds being laundered through accounts controlled by McGee and others.

In total, £101,443 was paid out due to the false VAT repayment claims, while a further £70,351 was withheld by HMRC.

McGee, of Collins Avenue, Loans, South Ayrshire, was today jailed for 30 months after being convicted of VAT fraud and money laundering offences at Ayr Sheriff Court.

Lynsey Thompson, of HMRC, said: “McGee used his knowledge of the VAT system to coordinate a scheme to steal from the public purse – money that is essential to fund the services we need, such as hospitals and schools.

“This was a shameful way for a former employee of 34 years to act but this conviction shows that nobody is above the law."

Rob Miles, NCA Scotland operations manager, added: “NCA investigators worked closely with our colleagues at HMRC to capture the evidence that was key to bringing McGee to justice.

“He used his experience and knowledge of the system to further his offending and probably thought this would help him evade detection.”

The others involved in the fraud were Mark Dryden, 37, of Riverview Gardens, Glasgow; Carly McGinley, 33, of Braes Avenue, Clydebank; and Gary Prentice, 36, of Bouverie Street, Glasgow.

All three were sentenced at Ayr Sheriff Court in February.

Dryden was jailed for 10 months and Prentice was ordered to complete 300 hours of unpaid work within 24 months and is subject of a Restriction of Liberty Order for four months. McGinley was fined £1,120.