Carousel fraud jumps to record high

VAT merry-go-round

Warning: roundabout

A significant number of carousel fraud cases worth more than £100,000 passed through English courts in the first six months of the year.

KPMG Forensic, which monitors fraud figures, said there was a total of 107 fraud cases in the six months leading up to June this year, which had a total value of £594m.

It said the dramatic rise in money laundering scams in the UK represented more than the whole of 2000, 2001, 2003 and 2004.

Four massive carousel fraud cases accounted for a hefty £440m chunk of that figure with the largest single case valued at a staggering £250m.

KPMG Forensic director Hitesh Patel said the hike in overall fraud scams in the UK amounted to a "step-change" that showed no sign of slowing down.

Carousel or missing trader intra community (MTIC) fraud, where traders who imported small goods such as mobile phones and computer chips between EU countries could effectively circumnavigate the VAT charges on those goods, had been a popular criminal activity.

In an effort to clampdown on what has been a growing EU-wide problem that cost the British taxpayer some £3bn last year, according to HMRC figures, the government introduced the "reverse charge" scheme on 1 June.

Speaking about the latest figures (here), Patel said: "Organised fraud by professional gangs is a major problem, though it is encouraging that there have been some very significant carousel fraud prosecutions in the last six months.

"It remains to be seen whether changes to the way that VAT must be paid by traders on mobile phones and computer chips... will result in a decrease of this kind of activity – or whether it will shift the focus of professional criminals to other commodities." ®

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