Despite a continued crackdown on VAT fraudsters, incidents of carousel fraud in the European Union (EU) now stand at their highest level since 1999, according to figures from HM Revenue and Customs (HMRC).
The total value of missing imports for just the first seven months of 2006 stands at £24.3bn. According to the figures released last week, this is an increase of £12.8bn since last year and an increase of £22.6bn since 1999. Despite the rise, an HMRC representative said it has “a comprehensive strategy” in place to minimise VAT losses caused by carousel fraud, also known as Missing Trade Intra-Community (MTIC) fraud.
“In response to the recent increase in transactions linked to attempted fraud, HMRC has significantly strengthened this strategy through a combination of legislation, litigation and operational activity,” the representative said. “Operational data shows that the strategy is beginning to have an impact on the level of trading associated with MTIC fraud.”
Phil Hemmings, director of corporate affairs at reseller Research Machines, told CRN that complexity in legal matters can sometimes enable fraudsters to discover loopholes.
“I suspect that the complex regulations mean people find a way to exploit the laws and find loopholes in them,” he said. “If you have complicated environments, they are open to the risk of scams.”
Andy Cordial, director of VAR Origin Storage Solutions, said that the government needs to take action to protect the channel.
“A clampdown on fraud in other areas may be pushing carousel fraud figures upwards,” he said. “This will mean a large revenue loss for the channel, but it could take a while to take effect.”
Earlier this month, HMRC foiled a suspected £165m VAT carousel fraud regarding the movement of a large mobile phone consignment. The failure of the fraud was thanks to HMRC working with its German counterpart (CRN, 4 September).
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