TWO businessman who failed to pay VAT for nine years were given a six-month ultimatum to pay back a further £180,000.

Business partners Robert McLean and John Hind were given a four-month reprieve in June to begin repaying an estimated outstanding bill of £206,121 to HM Revenue and Customs (HMRC) or risk jail.

Durham Crown Court was told that no VAT payments were made by the business, Atlas Welding and Engineering Supplies, of Houghton Enterprise Centre, Lake Road, Houghton-le-Spring, Wearside, between March 1998 and March 2007.

The court heard that the company did not declare any VAT for its entire operational period and had been using a de-registered VAT number.

McLean and Hind said they had taken steps to address the situation.

They said they were owed £72,000 by a company that went into liquidation, so used the VAT money to keep their business afloat.

They also tried speculating in stocks and shares, but lost about £600,000.

Hind, 45, of High Street, Low Pittington, near Durham City, and McLean, 50, of Huxley Drive, Chester-le-Street, each admitted fraudulent evasion of VAT.

The court heard they pleaded guilty on the basis they took advantage of confusion over their VAT registration at a time the company was suffering financial difficulties, because of the creditor’s inability to meet its debt to the company.

Judge Christopher Prince said the amount involved merited a 16-month jail sentence.

On their return to court yesterday, the judge was told they have £70,000 to pay back immediately, and that the estimated bill owed to HRMC has now risen to £308,155.

Judge Prince told them: “This was unlawful borrowing and I indicated if people borrow unlawfully, they should be in a position to repay.

“If they are not, it becomes outright theft and the sentence will become more severe.”

Ordering them to repay a further £180,000 in six months, Judge Prince told them: “Whatever you own, you can sell, whether it is the shirt off your back, but you better start getting that money together or I will start to doubt your basis of plea.

“You stole from the public and I suggest you make every effort to pay this money because you will not put the public purse out of pocket.”

The pair were bailed to return to court on April 14.