Customs swoop on £25m chips-to-gold VAT gang
Customs have arrested 12 people in an investigation into a multi-million missing VAT trader fraud.
Some eighty Customs officers were involved in a series of raids on business premises on November 12 in the Midlands and South East. The arrested are accused of stealing £25 million from the public purse in a 25-day period in 2002. As is the way of such things, the investigation has been given a name, Operation Devout.
According to Customs, the fraud was two-legged, with brokers selling computer chips and then using the proceeds to buy and subsequently sell gold bullion, on which no VAT was paid.
Customs issued a press release last week announcing the raids to accompany a seminar on missing VAT trader fraud. This was held in Downing Street and attended by representatives of the computer chip and mobile phone industries, the two sectors most affected by this fraud.
John Healey MP, Economic Secretary to the Treasury, who chaired the meeting, has this to say on the subject.
"VAT missing trader fraud is not a victimless crime. It costs around £2.5 billion a year, lines the pockets of criminals and robs the honest taxpayer. Customs continues to demonstrate that its law enforcement capability can be a match for the serious gangsters who
are now engaged in serious fiscal crime.
"The measures in place to tackle Missing Trader Fraud are in the interests of all legitimate businesses because the fraud distorts competition and forces legitimate traders out of business."
HM Customs definition of VAT Missing Trader Fraud
VAT Missing Trader Fraud or 'Carousel' fraud involves importing goods into the UK from the EU that are correctly zero-rated for VAT.
The goods are then sold on through a series of companies in the UK, all liable to VAT at the standard rate, before being exported back to the EU. In this particular fraud the goods were exported back to the original supplier. The company importing the goods incurs a considerable VAT debt as it has to account for VAT charged on the sales. It has no VAT repayment claim as the goods were zero-rated on import. In a fraud of this type this initial 'link' in the chain 'goes missing' and never accounts for the VAT due.
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