City Staff Owners Jailed Following £3.1m Cambridgeshire Tax Scam 2026

Key Points

• Stephen Moody, 62, and David McDowell, 56, both from Whittlesey, have been jailed for evading more than £3 million in income tax and VAT
• The men ran City Staff in Peterborough, a temporary staff recruitment, assembly and packaging service
• McDowell was the original owner of City Staff but transferred it to Moody after being declared bankrupt in 2008
• An HMRC compliance review in 2019 uncovered significant discrepancies between declared tax and actual turnover
• Moody was offered opportunity to resolve matter through HMRC civil fraud investigation under Code of Practice 9 but failed to comply
• The case was referred for criminal investigation after Moody’s non-compliance
• During trial at Cambridge Crown Court, the two men tried to blame each other for the crime
• Sentencing took place on 19 June 2026 at Cambridge Crown Court before His Honour Judge A Hurst

Cambridge (Cambridge Tribune) June 20, 2026 – Two Cambridgeshire men who evaded more than £3 million in income tax and VAT have been jailed after a trial at Cambridge Crown Court where they attempted to blame each other for the crime. Stephen Moody, 62, and David McDowell, 56, both from Whittlesey, operated City Staff in Peterborough, a business providing temporary staff recruitment, assembly and packaging services. The sentencing occurred on 19 June 2026, with His Honour Judge A Hurst presiding over the case at Cambridge Crown Court.

How Did HMRC Discover the £3 Million Tax Discrepancy?

An HM Revenue and Customs compliance review conducted in 2019 of City Staff uncovered significant discrepancies between the tax the business had declared and its actual turnover. As reported by the Cambridge News, the review revealed that the company had substantially underreported its income, leading to the discovery of the £3 million tax evasion scheme.

The investigation began when HMRC auditors examined the business’s financial records and identified that the declared tax payments did not match the actual business turnover. This discrepancy prompted a deeper investigation into the company’s tax affairs, ultimately revealing the scale of the evasion.

What Was The History Between Moody And McDowell Regarding City Staff Ownership?

David McDowell was the original owner of City Staff in Peterborough. However, after McDowell was declared bankrupt in 2008, he transferred ownership of the business to Stephen Moody. This ownership transfer became a significant point during the trial, as both men attempted to use it to distance themselves from responsibility for the tax evasion.

The 2008 bankruptcy and subsequent transfer of ownership created a complex relationship between the two men regarding the business. During the trial proceedings, this history became central to their attempts to blame each other for the criminal activity. McDowell argued that having transferred the business to Moody, he should not be held responsible for subsequent tax violations, while Moody claimed that McDowell, as the original owner, should bear primary responsibility.

Why Did The Case Move From Civil To Criminal Investigation?

Moody was given the opportunity to resolve the matter by making a full, open, and honest disclosure through an HMRC civil fraud investigation under Code of Practice 9. This civil procedure, known as COP9, offers taxpayers the chance to disclose tax irregularities without immediate criminal prosecution. However, Moody failed to comply with the requirements of this civil investigation process.

As reported in the Cambridge News, Moody’s failure to make the required full disclosure under Code of Practice 9 resulted in the case being referred for a criminal investigation. The Code of Practice 9 process requires taxpayers to make a “full, open and honest” disclosure, and failure to comply can result in criminal proceedings.

The transition from civil to criminal investigation marked a significant escalation in the case. Once referred for criminal investigation, HMRC investigators began gathering evidence for potential prosecution, which ultimately led to the trial at Cambridge Crown Court.

What Happened During The Trial At Cambridge Crown Court?

During the trial proceedings at Cambridge Crown Court, both Stephen Moody and David McDowell attempted to blame each other for the tax evasion crime. As reported by the Cambridge News, the two men tried to shift responsibility onto one another rather than accepting their own involvement in the £3 million tax evasion scheme.

The trial took place before His Honour Judge A Hurst at Cambridge Crown Court, with the sentencing occurring on 19 June 2026. During court proceedings, the ownership history of City Staff and the 2008 transfer from McDowell to Moody became central to their arguments. Each man attempted to use this history to minimize their personal responsibility for the tax evasion.

The court heard evidence about the HMRC compliance review from 2019, the discrepancies discovered between declared tax and actual turnover, and Moody’s failure to comply with the Code of Practice 9 civil investigation requirements. These elements formed the core of the prosecution’s case against both men.

What Are The Sentencing Outcomes For Tax Evasion In The UK?

Both Moody and McDowell have been jailed following their conviction for tax evasion. In the UK, tax evasion can result in up to seven years imprisonment when prosecuted in Crown Court, with the maximum penalty for cheating the public revenue being life imprisonment.

The sentencing of Moody and McDowell represents HMRC’s continued efforts to crack down on significant tax evasion cases. The £3 million amount evaded represents a substantial sum that should have been paid into the public purse for public services.

How Has HMRC Responded To The Conviction?

HM Revenue and Customs has been actively pursuing tax evasion cases involving significant amounts. The discovery of the £3 million discrepancy through the 2019 compliance review demonstrates HMRC’s audit and investigation capabilities.

The case illustrates HMRC’s approach to tax fraud investigations, beginning with civil compliance reviews, offering opportunities for civil disclosure under Code of Practice 9, and proceeding to criminal investigation when taxpayers fail to comply with civil procedures.

Background Of The Tax Evasion Development

This tax evasion case involving Stephen Moody and David McDowell represents part of HMRC’s broader effort to combat significant tax fraud in the UK. The development follows a standard HMRC investigation pattern: initial compliance review revealing discrepancies, offering civil disclosure opportunity under Code of Practice 9, and proceeding to criminal investigation when the taxpayer fails to comply.

The case involves City Staff, a Peterborough-based temporary staff recruitment, assembly and packaging service. The ownership history between McDowell and Moody, including the 2008 bankruptcy and transfer, created the complex relationship that became central to the trial dynamics.

The £3 million figure represents evaded income tax and VAT, combining two major tax categories. Income tax evasion involves failing to declare personal or business income, while VAT evasion involves failing to report or pay value-added tax on goods and services.

The transition from civil to criminal investigation occurred when Moody failed to make the required full, open, and honest disclosure under Code of Practice 9. This civil procedure is designed to encourage taxpayers to disclose irregularities without immediate criminal prosecution, but non-compliance results in criminal referral.

The trial at Cambridge Crown Court before His Honour Judge A Hurst concluded on 19 June 2026 with both men being jailed. The court considered the ownership history, the HMRC compliance review findings, and the failure to comply with civil investigation requirements as key evidence.

How Will This Tax Evasion Conviction affect Cambridgeshire Business Owners?

This development will significantly affect Cambridgeshire business owners in several important ways. The jailing of Moody and McDowell for evading £3 million demonstrates HMRC’s willingness to pursue criminal prosecution for substantial tax evasion cases, sending a clear message to business owners across the region.

Business owners in Cambridgeshire should now understand that HMRC compliance reviews can uncover significant discrepancies between declared tax and actual turnover. The 2019 review of City Staff that revealed the £3 million discrepancy shows that HMRC actively audits business records and has sophisticated methods for detecting underreported income.

The Code of Practice 9 process offers business owners an opportunity to resolve tax irregularities through civil disclosure rather than criminal prosecution. However, as Moody’s case demonstrates, failing to make a full, open, and honest disclosure under COP9 will result in criminal investigation referral. Business owners must understand that non-compliance with civil investigation requirements has serious consequences.

The trial dynamics where Moody and McDowell blamed each other demonstrate that attempting to shift responsibility during tax evasion trials is unlikely to succeed. Cambridgeshire business owners involved in similar situations should recognize that courts examine the overall facts of tax evasion cases, and ownership transfer history alone does not eliminate personal responsibility for tax violations.

Business owners operating temporary staff recruitment, assembly, and packaging services should particularly note this case, as City Staff’s business type was specifically identified. These industries may face increased HMRC scrutiny given this conviction.

The sentencing on 19 June 2026 at Cambridge Crown Court establishes a precedent for significant tax evasion cases in the region. Business owners should understand that tax evasion involving millions of pounds can result in imprisonment, with UK law allowing up to seven years for Crown Court tax evasion cases.

Cambridgeshire business owners should maintain accurate financial records and ensure tax declarations match actual turnover. The HMRC compliance review process can detect discrepancies, and businesses should be prepared for potential audits. Maintaining transparent tax affairs and responding appropriately to HMRC inquiries is essential to avoiding criminal investigation.

This case reinforces that HMRC will pursue criminal prosecution for substantial tax evasion, and business owners across Cambridgeshire should take note of the serious consequences of failing to comply with tax obligations and HMRC investigation requirements.