A total of 16 arrests were made by HM Revenue and Customs (HMRC) last week after the suspects were allegedly linked to millions of pounds worth of VAT carousel fraud.
In the UK a total of 50 search warrants were executed at business and domestic addresses in London, Glasgow, the Midlands, Manchester, Dover, Bristol and South Wales as part of HMRC’s crackdown on fraud.
Carousel fraud, also known as VAT missing trader fraud, works by criminals importing goods free of VAT from within the European Union. They then charge VAT when they sell on the goods to the supply chain, but do not pass the tax on to HMRC.
Aidan Close, a representative for HMRC, told CRN: “These raids have been in response to specialist intelligence about carousel fraud, which involves very large sums of money running into the millions. This is big-money fraud and when we believe fraud is being committed we will act.”
Close said the raids prove that fraud is still rife, but the HMRC’s response shows it is making steps when it is committed.
“There are a number of other measures we take to prevent fraud, such as looking closely at repayment claims where we think they might be suspect,” Close said. “This fraud is costing the country a lot of money and we are determined to crack down on it.”
Last week, Chancellor Gordon Brown revealed that VAT fraud cost the UK economy between £2bn and £3bn last year (CRN, 11 December).
Mike Lawrence, managing director of reseller Bentpenny, said: “Carousel fraud is rife all across Europe and HMRC has a really tough job on its hands.”
Jess Thompson-Hughes, managing director of distributor React Technologies, said: “Carousel fraud requires high volume shifting, so I do not expect any channel players to be involved in these raids. However, the mobile phone market seems to be rife with it.”
Last month, seven men were sentenced to more than 16 years in prison between them after being found guilty of VAT carousel fraud resulting from sales of counterfeit Microsoft software (CRN, 20 November).
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