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UK Imprisons Fraud Ring That Used HMRC Insider

by Jason Gorringe,, London

13 December 2017

HM Revenue and Customs (HMRC) has welcomed prison terms for a gang, including a former HM Revenue and Customs employee, that stole more than GBP2.4m (USD3.2m) in value-added tax (VAT).

The gang were found guilty at Southwark Crown Court of conspiracy to cheat the public revenue on December 5. They used insider knowledge provided by a former tax office worker to fraudulently claim millions in VAT repayments. She was described by the judge as the "linchpin" of the fraud.

According to HMRC, it undertook a three-year investigation to uncover a "highly organized" fraud, during which they found that the former HMRC employee had used her position working in the Electronic Payments Team in Southend, Essex, to identify unallocated VAT payments and fraudulently pay them elsewhere. The fraud involved making payments to companies, to whom accounting services were provided by two members of the gang, with the ill-gotten gains later siphoned off.

The investigation came to light when a legitimate taxpayer of an unallocated payment queried why their payment to HMRC had not credited to its VAT account. During the course of the inquiry a vigilant HMRC employee noticed that this payment had been misallocated and that a further three payments had also been misallocated to the same incorrect trader. In all four instances the payments had been handled by the prosecuted former HMRC employee.

The six members of the fraud gang were sentenced to a total of 24 years in prison and the agency is seeking to recover the funds.

Sentencing Green, Judge Joanna Korner said the HMRC employee had demonstrated a "colossal breach of trust."

TAGS: compliance | VAT tax authority guidance | tax | accounting | United Kingdom | tax authority | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC) | trade | services | VAT compliance matters

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