Keith Chamberlain and Rhonnan Mundy submitted false VAT repayment claims to HMRC by setting up companies and providing fake documentation to support their claims.
The pair were each jailed for two years and eight months.
Between January 2008 and July 2010, Chamberlain and Mundy conspired together in registering a number of companies to falsely reclaim VAT on zero rated services including PD&C Ltd, a building company that specialised in dry lining.
PD&C Ltd reclaimed over £550,000 in VAT alone but HMRC officers found that between January 2008 and October 2009 there was no evidence of any trading activity.
None of the legitimate companies the pair had claimed to have done business with had ever heard of them.
Both men pleaded guilty and were sentenced at Canterbury Crown Court.
Confiscation proceedings are in place to reclaim the proceeds of their crime from Chamberlain of London Road, Dover and Mundy of Mill Lane, Deal.