After his arrest by HM Revenue and Customs Joseph Dellett, 50, said that when he was declared bankrupt in 2007 with debts of over £70,000, he simply continued to operate below the radar.

Working as a subcontractor for other companies he didn’t declare or pay tax on his earnings but continued to charge his customers VAT, which he kept for himself.

For four years he avoided paying more than £38,000 in VAT and £18,000 in income tax and national insurance contributions.

Jo Tyler, Assistant Director, Criminal Investigation, HMRC, said:  “The vast majority of businesses play by the rules but Dellett chose to evade the taxes he should have been paying.

“People who attempt to run a business or work in the black economy should take notice, we can and will track you down,

“HMRC is serious about ensuring people meet their tax obligations and anyone like Dellett, deliberately evading tax, will face not only a heavy fine, but possibly a criminal prosecution as well.”

Dellett failed to advise HMRC that he was again self-employed following his bankruptcy in 2007 and did not complete any Income Tax Self Assessments.

But HMRC officers discovered he had received payments for work with a number of contractors in the Sunderland area.

Dellett was arrested in August 2012 and pleaded guilty to the fraudulent evasion of income tax and VAT. He was sentenced today at Newcastle Crown Court.