UK Customs Department Swoops In Missing Trader VAT Fraud Probe

by Robin Pilgrim, LawAndTax-News.com, London

07 July 2003

The UK's Customs and Excise Department has raided more than 70 properties in the United Kingdom and Spain, and has arrested thirty-three men and six women in one of the largest VAT fraud operations ever carried out.

According to reports, the probe into the 'carouseling' of large quantities of mobile phones forms part of the department's campaign to crack down on 'missing trader' fraud, which is thought to cost the country around £2.7 billion in unpaid VAT.

In order to execute the scam, a UK VAT registration must be obtained in order to acquire goods VAT free from other EU member states. The goods are then sold on at VAT inclusive prices, following which the fraudster disappears without paying the VAT back to the UK government.

The 'carousel' element comes into play because the goods are then sold to a buyer in another member state - often the original exporter - for less than the price paid to the original seller.

Europe's largest mobile phone retailer, Carphone Warehouse confirmed last week that its headquarters in London had been raided as part of the probe, but dismissed the visit of Customs officials as a 'fishing expedition'. Speaking following the raid last Wednesday, Carphone Warehouse chief executive, Charles Dunstone announced that:

'No allegations were made against the individual employees, no searches have been made of their homes and no allegations have been made against the company.'

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