A restaurateur pocketed nearly £40,000 in VAT from customers' bills in a tax evasion scam.

Faruk Mohammed Mahmud, 40, deliberately failed to register his Middle Eastern restaurant in Edinburgh with HMRC but charged diners VAT on their meals for two years.

His scam at Nawroz on Potterrow was uncovered by officers when they noticed "promotional" meals being advertised on a well-known online deals site.

When they started looking into his business dealings they also found he had tried to distort his turnover and avoid getting caught by diverting cash through his personal bank accounts.

Anne-Marie Gordon, assistant director of HMRC's fraud investigation service, said: "Mahmud was well aware that he should have been registered for VAT but thought he could cheat his own customers and other taxpayers.

"The money he stole could and should have been spent on vital public services, not as a financial safety net for Mahmud.

"HMRC will not hesitate to investigate someone's finances where we have reason to suspect fraudulent accounts. He now has to pay the price for his criminal activities."

Mahmud, who previously pleaded guilty to the fraudulent evasion of VAT, appeared at Edinburgh Sheriff Court for sentence on Friday.

Sheriff Fiona Reith ordered him to repay the total £38,355.90 VAT he pocketed.

He has already repaid £24,269.00 but if he does not make up the full amount then he will be given a default prison sentence.

Ms Gordon added: "VAT fraud is a serious offence and I urge anyone with information about people or businesses involved to contact the HMRC VAT fraud hotline on 0800 59 5000."