Customs Reveals Tenfold Drop In 'Missing Trader' VAT Fraud

by Robin Pilgrim, LawAndTax-News.com, London

11 March 2005

The UK's Customs and Excise Department revealed on Wednesday that as a result of its ongoing crackdown on 'missing trader' or 'carousel' VAT fraud, millions of pounds have been saved for the UK Treasury.

Currently, EU-based firms that have registered for VAT can exchange goods free of duty, and missing trader fraud arises when goods are sold on at VAT-inclusive prices, following which the fraudster disappears without paying the VAT back to the government.

According to government figures, at the height of the scam's use in 2002 it was worth around £11 billion, costing the Exchequer nearly £2 billion in illegitimate VAT rebates.

However, Customs revealed that the scale of missing trader frauds fell substantially in 2003 and 2004, meaning that the Treasury now loses just £100 million per year in revenue as a result of such scams.

Speaking to the Independent this week, an unnamed Customs spokesman announced that:

"We have been successful in cracking down on this fraud. It has contributed to lessening the VAT gap."

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