Six Arrests Made In Missing Trader VAT Probe

by Ulrika Lomas, for LawAndTax-News.com, Brussels

03 March 2005

According to reports in the European media last week, six arrests have been made in an investigation into cross-border mobile phone fraud, code-named 'Operation Domino'.

The probe was looking into a type of VAT fraud known as 'missing trader' or 'carousel' fraud. Currently, EU-based firms that have registered for VAT can exchange goods free of duty. However, 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.

The scam uncovered and investigated by customs officers in Germany, Holland, Norway, Spain and the UK is thought to have cost European governments in the regions of £580 million in fraudulent VAT rebates.

According to the UK's Customs and Excise Department, carousel VAT fraud cost UK taxpayers alone between £1 billion and £1.7 billion in the 2003/04 tax year.

Speaking to the national media, assistant chief investigation officer with the Customs Department, Jim Jarvie praised the "high degree of international co-operation between the authorities".

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