A SAILOR who transformed a canal boat into a replica Nazi U-boat is embroiled in a £1m fraud case.
Richard Williams, 51, from Fleetwood Road North, Thornton, is the self-styled captain of the U-8047 vessel.
He was arrested last week when Revenue and Customs officers boarded his creation.
An investigation of the novelty boat, which was moored behind the Royal Armouries building in Leeds, was carried out alongside police and the UK Border Agency.
The arrest follows a Revenue and Customs investigation, codenamed Operation Cloudcastle, into the alleged VAT fraud and subsequent laundering of the criminal proceeds.
A spokesman for HM Revenue and Customs confirmed a 51-year-old man had been arrested in connection with a suspected £1m VAT fraud linked to fake sales of disability equipment.
Mike O’Grady, Her Majesty’s Revenue and Customs’ assistant director of criminal investigation said: “This is an HMRC-led investigation targeting a suspected VAT repayment fraud over several years and the laundering of the criminal profits by businesses based in Blackpool, Lancaster, Penrith and Workington.
“Further details cannot be provided at this early stage because our investigation is continuing.
“However, tax fraud and attempts to launder the proceeds of crime are treated extremely seriously by HMRC, and we will relentlessly pursue any individuals or crime gangs believed to be attacking the public revenue in this way.”
The 70ft U-Boat was first launched in October 2010 at Botany Bay, near Chorley, after around £50,000 was spent on building the unique vessel.
Mr Williams said he spent £25,000 on the shell of a traditional narrowboat and then the same amount instructing a yard in Liverpool to build him an identical superstructure.
It was then transformed into a museum last year as part of the U-8047 Trust which formed a social enterprise for the upkeep of the craft and for the education of children.
It is believed the classic war film Das Boot was the inspiration behind the boat.
On his website, Mr Williams says his main hobby in life is boating and adds: “Newspapers and TV tend to call me ‘eccentric’, however in reality I’m just plain old barking mad.”
Mr Williams was bailed until April 19.