HMRC Stings Missing Traders For GBP12 Million

by Robin Pilgrim, LawAndTax-News.com, London

01 September 2006

At a series of confiscation hearings held this week at the Nottingham and Birmingham Crown Courts, seven men convicted of VAT fraud have been ordered to repay nearly GBP12 million to HM Revenue & Customs (HMRC).

The case involved a highly sophisticated attack on the UK VAT system of around GBP38 million by an organised criminal gang, controlled by British nationals in Spain. Prison sentences totalling 30 years were handed down to the gang following a series of trials between 2002 and 2006.

The courts heard that two Nottinghamshire men, Steven Chapman and Neil Walker set up a company called Intercom Espana 96 SL in 1996 near Benidorm, Spain. They initially sourced mobile phones locked into the Spanish 'Telefonica' network. The phones were obtained at a cheap rate, being subsidised by the network. They were shipped to the UK and unlocked by a series of 'unlockers' and sold into the UK market in bulk.

The phones were sold through UK based 'missing traders', set up and controlled by Chapman and Walker, to major UK mobile phone distributors. The VAT charged by the 'missing traders' was not paid over to HM Customs & Excise, (now HMRC), and a classic MTIC fraud was born.

Nick Burriss, Assistant Chief Investigation Officer for HMRC, announced that:

"We are pleased that the conclusion of this lengthy case has resulted in heavy prison sentences and a series of successful Confiscation Orders to reclaim the profits gained by this criminal organisation. This was not some kind of advanced tax planning, but organised fraud by criminals, with the active co-operation of others looking to make some fast and easy profits, at the expense of the British taxpayer."

"This sends out a clear warning to those involved in missing trader, or carousel fraud as it is more commonly known, that we are committed to tackling fraud and returning the profits to the Treasury to fund vital public services such as hospitals and schools."

He added:

"These criminals thought that by setting themselves up in Spain and operating the fraud from there they would be safely out of the reach of the UK justice system. They have been proved wrong by the dedication, skill and professionalism of the investigating officers who were highly commended by the trial judge."

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