Andrew Smith launched a surfboard business, installing microchip trackers

He tried to get interest from Dragon's Den star Richard Farleigh

But business began to fail and Smith started faking his VAT claims 
Five years later he was involved in £270,000 VAT racket, faking invoices 
Cardiff Crown Court heard most of his income in 2013 was from taxman  
HMRC exposed fraud and Smith, a father of three, was jailed for 20 months
Smith said he had been caring for his wife at the time, who had cancer 

An entrepreneur who founded a surfboard tracking business has been jailed after he faked VAT claims for £270,000 when his business failed.

Surfer Andrew Smith, of Newport, South Wales, launched his business putting tracking chips into surfboards and even tried to attract investment from Dragon's Den star Richard Farleigh.

But the business, called, began to fail and Smith started making false VAT claims in a £270,000 racket.

Andrew Smith has been jailed after it emerged he was involved in a £270,000 VAT scam as his business failed

Five years later most of the father-of-three's income was coming directly from the taxman, after Smith faked invoices and bank statements.

The scam was referred to as a 'ticking time bomb' and was was exposed after he gave an officer from HMRC fake invoices, claiming he had spent tens of thousands of pounds on microchips at a time when the business was making sales of less than £5,000.

Smith has been left penniless and was jailed for 20 months after he admitted fraud. 

Cardiff Crown Court heard that Smith hoped to make a fortune by launching a business putting tracking chips into surfboards.
The business sold microchips to the surfing and extreme sports community to allow their equipment to be tracked if it was stolen.

In 2008 a spokesman for Mr Farleigh's company was quoted as saying:  'We're investing as much in Andrew as in the idea. He's so enthusiastic. We almost have to hold him back sometimes.'

But Mr Farleigh has told MailOnline that, though he did have 'preliminary discussions' about investing in the company, he did not put any money into the venture.

Five years later Smith's VAT fraud was exposed.

The court was told an officer from HMRC met with Smith in April 2013 to check over his claim for VAT repayment for buying parts from a foreign supplier.

He gave her invoices showing that in March 2013 he had spent £45,748.25 on microchips from a company in Germany.

Yet investigations showed that the invoices were faked and the company had never had dealing with

At the time the company was making just £5,000 in sales.
HMRC then discovered bank statements, which had been submitted by Smith, were also falsified and most of his income was coming from the taxman.
Prosecutor Nuhu Gobir said: 'It didn't appear the defendant was running a legitimate business.'

Smith, of Newport, South Wales, told officers his wife had been diagnosed with cancer in August 2008 and from that date he worked from home and became her carer until she recovered. 

He said: 'I'm going to be honest with you. Some of these numbers, they have been messed up, I have fabricated them. I'll hold my hands up.'

He admitted the invoices and bank statements were false and had been created on his computer and that the information in his VAT returns was not correct.

Chris Rees, defending Smith, described his scam as being a 'ticking time bomb'.
'It was a matter of time before he was discovered,' said Mr Rees.

It was a legitimate business to start off with, albeit a business that failed. It was at one stage a business regarded as highly promising,' he added.

Mr Rees said it should be noted that Smith committed the fraud to pay for his family and home, not to live in luxury.  
Smith had admitted being knowingly concerned in the fraudulent evasion of VAT.

Jailing Smith for 20 months, Recorder Ian Murphy said he accepted the 'genesis' of him beginning the fraud was his wife's illness.
'It was an extremely aggressive form of cancer that had a dramatic impact on her health,' he said.

No application was made to recoup the £273,000 because Smith has no assets. 

An earlier version of this story stated that Richard Farleigh invested £60,000 in In fact, while Mr Farleigh considered investing in the company, he did not put any money into the venture. We are happy to clarify this.