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HMRC Announces Massive Carousel Fraud Sting

by Jason Gorringe,, London

14 June 2007

After one of the biggest ever investigations by the UK's HM Revenue & Customs (HMRC), involving nearly 100 mobile phone traders and two separate criminal trials, six men behind a GBP85 million VAT fraud were jailed for a total of more than 47 years on Tuesday.

Raymond Cox, Brett Issitt, Michael McNeill, Paul Sweeney, Peter Glover and Colin Jones were all jailed at Liverpool Crown Court following a five-year investigation by HMRC officers.

Tracking their fictitious trading across the North West, Midlands, Republic of Ireland and Europe and the subsequent court case has been one of the biggest 'missing trader' or MTIC frauds to be prosecuted. Over a nineteen month trading period, HMRC officers identified losses of over GBP85 million in VAT linked to the activities of these co-conspirators.

Peter Hollier, Head of Criminal Investigation in the North West for HMRC announced that:

"This was not some kind of victimless crime, but organised fraud on a massive scale perpetrated by criminals all bent on making fast and easy profits at the expense of the British taxpayer. This was theft of revenue needed to fund our country's public services. Missing trader fraud is not merely a paper fraud but often features links to other forms of criminal activity. This case is a further example of our determination and success in bringing to justice the criminals behind this type of fraud. The sentence sends out a clear message to others who may contemplate such criminal activity."

Presiding judge, His Honour Judge Swift added:

"This conspiracy generated considerable loss of public revenue. On the documents something like GBP85 million was taken from public revenue at a time when revenues were stretched and honest people continued to pay tax. It was a substantial and orchestrated exercise but it was no more than a scam in which all participated. "

The court heard the multi-million pound fraud centred on the mobile phone industry. Investigations by HMRC began in 2000 and involved breaking the audit trail of 98 businesses based in the UK, Germany, Belgium, Spain and the Netherlands. The fraudsters were directors and executives of seven of the companies identified during the trial.

The phones were purportedly imported into the UK VAT free by various companies set up by the fraudsters, who then sold the phones on, charging VAT that was never paid over to HMRC. These companies then went 'missing'. The phones were then 'sold' down the line to various 'buffer' traders before they were exported again often to be repurchased by the original companies at a trading loss.

According to HMRC, as the accomplices got more confident the transactions grew in number and value, and it was clear from handwritten records found that those involved had difficulty themselves keeping a track of the transactions as the scale escalated.

These cases were successfully prosecuted by the Revenue & Customs Prosecutions Office (RCPO). RCPO is an independent prosecuting authority that reports to the Attorney General, and is responsible for the prosecution of all HMRC cases in England and Wales.

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