Melvyn Horton, 58, used fake invoices to make multiple false claims for VAT refunds to HM Revenue and Customs.

He used the cash to take expensive holidays and fund private schooling for his kids.

Horton, who ran Cobham Electrical Ltd, was caught after HMRC officers found that he stole the identities of seven companies to create fake sales and purchase invoices, and then submitted the fraudulent repayment claims to HMRC between 2009 and 2013.

Andrew Sackey, Assistant Director, Criminal Investigation, HMRC said: “Criminals like Horton who take a positive decision to steal from the tax system and, ultimately, from every honest taxpayer in the UK must pay the price.

“In this case as well as being sent to jail, we are now looking to recover the profits of his criminal conduct.”

Horton fraudulently received £1,533,598.82 in VAT refunds.

He was arrested at his home in Surrey in June 2013 and later charged.

When HMRC challenged Horton he admitted committing VAT fraud and on 30 May 2014, he pleaded guilty to withdrawing £82,000 from his bank account after he was arrested – money he had obtained committing the fraud.

Horton was sentenced last week at Guildford Crown Court to three years and eight months imprisonment and disqualified from being a company director for 15 years.

Confiscation proceedings are in place to reclaim any financial gain.