More Arrests Come As A Result Of HMRC VAT Fraud Crackdown

by Robert Lee, Tax-News.com, London

02 July 2007

HM Revenue & Customs (HMRC) officers investigating a suspected multi-million pound VAT fraud made 10 arrests last week in nationwide raids.

Arrests were made across the UK, and 20 premises were searched in the co-ordinated dawn raids. Operation Varlet followed an 18 month investigation into a complicated missing trader VAT fraud, commonly known as "carousel" fraud.

The investigation examined a large scale, complex missing trader intra community (MTIC) VAT fraud involving a sophisticated network of individuals, companies and bank accounts. Those arrested are suspected of being part of a ring of companies that fraudulently traded mobile phones, buying them VAT-free from the continent to supply to businesses in the UK, and then defaulting without paying the VAT due to HMRC.

Euan Stewart, Director of Operations, Criminal Investigation for HMRC stated that:

"Missing trader fraud is a sustained attack on HMRC, and tackling it is HMRC's top priority. Today's arrests follow months of painstaking investigative work by dedicated officers. The level of sophistication of these frauds means that our investigations are becoming more complex, but we are committed to working with the Revenue and Customs Prosecutions Office to bring the criminals behind the frauds to justice and to recovering the money stolen from the British Taxpayer. This crime is not victimless; it is organised and causes real harm."

The arrests took place in Stoke-on-Trent, Birmingham, Slough, Maidenhead, Uxbridge, Rickmansworth, Bushey and Hanworth.

Between April and December 2006, there were 11 successful prosecutions for missing trader fraud carried out by the Revenue and Customs Prosecutions Office on behalf of HMRC. This resulted in 40 convictions, with 180 years imprisonment imposed.

Missing Trader Intra-Community (MTIC), or 'missing trader' fraud as it is more commonly known, is a highly sophisticated EU-wide scam in which criminals import high value goods such as mobile phones and computer chips, free of VAT, from other countries in the EU. These goods are then sold in the UK with VAT attached, but the criminals disappear with the tax they have collected instead of handing it over to HMRC. A more abusive form of the fraud - known as carousel fraud - involves the same goods being traded around contrived supply chains within and beyond the EU, re-entering the UK on a number of occasions, with the VAT being stolen each time.

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