The Director of Operations at the VAT Department testified in court today that two businessmen had failed to declare VAT of €105,896 on sales of €1.47 million in the past six years.

Gregory Brincat from Swieqi and Mario Brincat from Santa Venera stand charged with evading VAT. They are directors of S&R Handaq Ltd, a manufacturer of paints and varnishes. In their statement to the police, the two men admitted to evading the tax since it was introduced 14 years ago. Mr Brincat is also one of those charged in the VAT scam.

Police Inspector Angelo Gafa told the court that according to receipt books used only for cash sales without declaring VAT, sales between 1996 and 2007 amounted to Lm631,512.42 (€1.47 million).

He explained that the investigations began in 2007 when one of the company's employees was charged with and convicted of misappropriation. During his interrogation, he revealed how the company he had worked for used to sell products without charging VAT. It used a computer system to register sales but also had separate sales register for sales without VAT.

Ms Hafley said that in July this year the company settled a bill of more than €132,000.

At the end of the sitting the prosecution asked the court to freeze the assets of both the accused, as well as those of the company in terms of the Money Laundering Act. Magistrate Clarke said she will decide at a later stage.