A veteran VAT inspector narrowly avoided prison after pocketing £1.2million from a property empire – while running a tax scam.

Buy-to-let baron Savita Seth, who was a VAT inspector for 20 years, deceived the taxman and mortgage lenders for 17 years alongside her husband Naveen.

Savita sobbed and said “bless you” as the judge at Isleworth Crown Court suspended her two-year prison sentence  despite jailing Naveen for three years and eight months.

The pair, both 47 and from Uxbridge, north west London, rented out 12 properties earning £1.2m and paid £500,000 into their bank accounts.

The properties were split into bedsits to maximise profits and they also swindled £63,983 in tax credits.

Judge Nicholas Wood said: “I have considered whether the Crown’s argument on culpability because you abused your position of power, trust or responsibility in regards to your employment.

“Although you were working in HMRC you didn’t use the particular knowledge or inside skill in order to further this offence.

“I’ve listened to various points in particular your good character, your own health problems, your role as a carer for two generations of the family and in particular health problems and behavioural problems of your youngest son.

“I take the view this is very much a borderline case but in the circumstances I feel able to suspend the sentences of imprisonment.”

Mum-of-two Savita sobbed as she was let out of the dock, and said: “Thank you so much. I bless you.”

The court also heard how her father-in-law has dementia and she would have to act as carer to her own parents as well as her husband’s now that he is in jail.

The judge also declined to impose a curfew order or hand her any hours of unpaid work.

He said: “Rather bluntly you have an awful lot on your plate for the foreseeable future considering I sent your husband to prison on Friday.

“Giving you unpaid work would be setting you up to fail.”

During the scam the couple rented out three bedsits at their home plus parking spaces in their drive – and planned to expand their portfolio to the US.

Police found the book A Guide To Becoming A HMO (Homes of Multiple Occupation) Millionaire during a raid on their house and discovered they also had a villa in Spain, an apartment in Florida and a seaside caravan.

The pair had two commercial properties, bought for £135,000 and £111,000 cash, while Naveen had no obvious income and Savita was a £20,000-a-year civil servant with HMRC.

Judge Wood said while jailing her husband: “This was fraudulent activity conducted over a sustained period of time.

“In terms of the tax credits you had no right to be claiming them right from the beginning.

“You have however considerable mitigation, positive good character references, and I take this all into account.

“They enable me to reduce the aggregate figure I would otherwise have passed from the region of five years to one of three years and eight months.”

Last month the couple were convicted of fraudulently obtaining mortgages on two properties in Hillingdon and Colindale and failing to declare their rental income between 1995 and 2012.

They also fraudulently gained £63,983 in Job Seeker’s Allowance over many years which Naveen would “never have been eligible for” if he had been honest about his finances.

Additionally they were convicted of concealing profits made from capital gains, avoiding a tax bill of £90,000 while Naveen was also found guilty of forging a lawyer’s letter and Savita of wrongfully disclosing information.

The letter, made out in the name of a Harrow lawyer, was in relation to a property the Seths planned to buy in America.

Previously prosecutor Ailsa Williamson said: “They lied about their incomes. They rented out most of the properties and got income but never told the tax man about it.

“They sold three of the properties but did not declare their profit.

“The icing on the cake was tax credits they claimed by lying about their income.”

The Seths falsely inflated their incomes to banks and building societies to two obtain mortgages on properties in Colindale and Hillingdon, while Naveen represented himself as a high-earning IT consultant even when claiming Jobseeker’s Allowance.

Miss Williamson said: “Some of the lies were blatant as he was made redundant in 2002. What is galling is Savita was working for HMRC as a tax compliance officer specialising in VAT.”

Miss Williamson said the couple had not declared rental income for “many years” from 1996 onwards.

She said: “In relation to Savita, the Crown would also point to abuse of power, trust or responsibility.

“It was her position by which the Crown say she must have been aware of her need to have her tax affairs completely above board, and her failure to do so over a sustained period is a breach of this trust and responsibility imposed on HMRC officers.”

Besides their eight-bedroom home the couple bought properties in Docklands, Hayes, Uxbridge, Harrow, Hillingdon, Colindale and Bracknell.

The two commercial buildings – a restaurant and takeaway with flats – were in Cumbria and Bingley, West Yorkshire.

The couple were cleared of falsely obtaining mortgages for their portfolio except for the Colindale and Hillingdon properties.

The Seths, of 7 Manor Way, Uxbridge, will later face a confiscation hearing.