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Canada, UK Cooperate In Anti-VAT Fraud Sting

by Mike Godfrey, Tax-news.com, Washington

14 June 2017


The Canada Revenue Agency (CRA) has announced that investigators from Canada and the UK carried out a number of searches on June 13 in connection with an alleged tax fraud scheme.

The CRA said that it launched an investigation after discovering that, over a five-year period, 11 foreign nationals based in the UK allegedly orchestrated a so-called carousel scheme. This tax fraud and money laundering scheme involved an attempt to obtain CAD52m (USD39.4m) in false GST/HST refunds and rebates.

More than 80 investigators from the CRA and the UK's tax agency, HM Revenue and Customs, were involved in the execution of search warrants at three locations in Canada and six locations in the UK.

According to the CRA, the fraud involves an organized scheme where a business buys and sells goods or services, and charges the GST/HST from one company to another. The GST/HST input credit for taxes charged is then claimed from the CRA for a refund.

However, the CRA said that the businesses throughout the chain that sell the goods or services and allegedly charge and collect the tax in fact never remit the GST/HST to the Government.

The CRA added that this process can be repeated many times, resulting in the goods moving around as a "carousel."

TAGS: compliance | tax | business | tax compliance | tax avoidance | goods and services tax (GST) | United Kingdom | tax authority | Canada | HM Revenue and Customs (HMRC) | revenue statistics | HM Revenue and Customs (HMRC) | services

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