Darren Reay, 46, traded on eBay as Darren Reay Watches and also from Wight’s Watches in Cowes, Isle of Wight.
He used the money to fund a lavish lifestyle of luxury properties, cars and designer watches.
Reay, of Grimoldby, Lincolnshire, admitted misdescribing the watches as low-value ‘precision instruments’ – allowing him to pay import VAT of just £7,805 during a four-year fraud. He claimed individual items were worth between $50 and $100 when importing them.
Colin Spinks, assistant director of the Fraud Investigation Service at HMRC, said: ‘Reay lied to steal £1.25m from the UK public. His crimes were driven by pure greed to fund a luxury lifestyle he couldn’t afford.
‘We will ensure honest, hardworking businesses do not suffer from being undercut by fraudsters like Reay.’
He was jailed for three years at Teesside Crown Court after admitting fraudulent evasion of VAT totalling £1.25m. HMRC found more than 520 packages had been imported from one retailer in New Jersey, United States, with £6.3m being paid out by money transfer.
Reay told investigators the watches, pictured left and right, were imported to order and he would receive commission. The offences took place between March 2011 and March 2015.