Salim Sakaria from Lancashire was part of a group of 11 people who attempted to steal £4.2m between 2009 and 2011, according to the Revenue.
The group, which was led by Sakaria, set up 19 different fake construction companies. They used “puppet” directors, fake invoices and bogus building contracts for housing developments as a smokescreen to hide their criminal activity, the Revenue said.
Following a criminal investigation, HMRC found that people were paid up to £35,000 to act as directors, enabling the group to use their names and addresses for the bogus companies to claim illegal VAT refunds.
The Revenue also found that 20 companies were repaid more than £2.9m in fake VAT claims before HMRC froze repayments.
Sakaria lied about being an accountant, the investigation revealed. He also owned six properties in Preston valued at £408,464, a designer watch, a Mercedes Benz car and had almost £2m in cash, some of which had been transferred to Dubai.
As a result he was ordered to repay £2,276,149 within three months or serve a further compulsory seven and a half years in jail as a default sentence.
He has already been serving a five-year jail sentence since October 2014 for the VAT fraud. He was also sentenced for an assault charge the same day and a further three years were added to his jail term, which will run consecutively.