HMRC Stings Four Over GBP10m Carousel Fraud

by Robin Pilgrim, LawAndTax-News.com, London

01 November 2006

Four men in the UK were sentenced to a total of 57 years in jail on Friday, after being found guilty earlier in the week of evading GBP10 million in VAT and the laundering of the proceeds of this fraud.

The four were:

• Durgesh Mehta, director of Virgini Ltd, who was jailed for a total of 33 years for one count of cheating the public revenue, three counts of money laundering, and conspiracy to transfer criminal property under the Proceeds of Crime Act.
• Gerald Reardon, who was was sentenced to 8 years imprisonment for conspiracy to transfer criminal property under the Proceeds of Crime Act.
• Matthew Sharman, who was sentenced to 8 years imprisonment for conspiracy to transfer criminal property under the Proceeds of Crime Act.
• Peter Ratcliff, who was sentenced to 8 years imprisonment for conspiracy to transfer criminal property under the Proceeds of Crime Act.

The court heard that between July 2003 and October 2003, HMRC paid Virgini Ltd VAT repayments of GBP7 million following submission of false VAT returns.

These repayments were based on the purchase of mobile phones that were then allegedly exported by Virgini Ltd to Kyiv in the Ukraine. The total VAT claimed by Virgini Ltd in the period the transactions took place was GBP10 million.

Readon and Sharman were alleged to have laundered funds derived from the GBP10 million VAT fraud through a business bank account of an offshore company controlled by the former, known as Gazelle Corporation Ltd.

HMRC investigators uncovered the fraud in November 2003, when they seized just under a million pounds in cash being delivered to the two men.

Various sums of money were transferred from Virgini Ltd to the accounts of the Fone Connection Ltd and Hatherley Enterprises Ltd. Both of these companies were controlled by Ratcliffe, and this money was transferred to a broker in Holland.

Further enquiries in Holland revealed Dutch authorities were investigating the Dutch brokers for money laundering. HMRC investigators obtained evidence of Peter Ratcliffe's and Matthew Sharman's connections to the brokers, along with the Gazelle Corporation Ltd.

Debbie Hayman, Assistant Chief Investigation Officer for HM Revenue & Customs stated on Friday that:

"This sends out a clear message to those involved in missing trader, or carousel fraud as it is commonly known, that we are committed to tackling VAT fraud. Tax fraud is not a victimless crime, it is criminal theft of revenue needed to fund our country's public services."

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