Twenty One People Jailed In Major VAT Fraud Scam In The UK

by Robin Pilgrim, LawAndTax-News.com, London

06 October 2008

Twenty one VAT fraudsters in the UK were given combined sentences of 133 years imprisonment last week when HM Revenue and Customs (HMRC) successfully convicted them of the deliberate evasion of taxes relating to mobile telephones.

The fraudsters, headed by a Mr Craig Johnson of north Staffordshire, engineered the 'missing trader' scam by devising a two-part method of tricking HMRC into giving them VAT rebates for mobile phones they had been exporting throughout Europe.

Firstly, the clan used specially-set up companies to import VAT-free phones from the EU into the UK, which were then on-sold plus VAT to other UK companies. In what is termed a 'carousel' operation this second set of companies re-exported the phones to the EU, claiming rebates of the VAT they had been charged. The first batch of intermediary companies would however be liquidated without paying the VAT they had supposedly collected.

Commenting on the case, which first attracted an enquiry over seven years ago, HMRC's deputy director of operations for criminal investigation Chris Harrison commented:

“This was not a victimless crime, but organised fraud on a massive scale perpetrated by criminals bent on fast and easy profits at the taxpayer’s expense.”

Mr Johnson, who is thought to have executed the majority of the scam, used profits made from the fraud to make extravagant purchases including 3 UK properties - of which one is worth GBP3m - 7 Dubai apartments, 4 cars valued at GBP160,000 and 2 helicopters.

Mr Johnson subsequently received the highest level of punishment, being sentenced to twelve-and-a-half years behind bars, together with disqualification from company directorship for 14 years.

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