Monica Davies, a director of Luton-based Comveen Ltd, has been disqualified as a director for 13 years after being found guilty of making wrongful VAT reclaims – known as MTIC or "carousel fraud" – against HMRC totalling more than £800,000.
After an investigation by a specialist team of the Insolvency Service over unpaid VAT owed to HMRC, Davies has given an undertaking to the secretary of state for business, innovation and skills, to be disqualified as a director until 2027.
The investigation discovered that between 10 March 2005 and 6 December 2006, Comveen Ltd bought mobile phones in the UK and made sales of more than £122m – including more than £106m to other UK wholesalers, and over £15m to wholesalers in other EC countries.
Comveen then filed quarterly returns with HMRC reclaiming UK VAT of £834,443, that "missing traders" had failed to pay earlier in the supply chain.
These reclaims were denied by HMRC and an appeal later dismissed at a VAT tribunal.
The tribunal judgement found that HMRC was correct in making its decision and concluded: "The only reasonable explanation for the transactions with which Comveen was involved is that it is connected with the fraudulent evasion of VAT and therefore, as Mrs Davis herself admitted, Comveen should have known that this was the case."
For her part, Davies was found to have allowed Comveen Ltd to make payments to unconnected third parties totalling at least £17.3m. Covert inspections conducted by HMRC officers found that lorries supposedly containing mobile phones for sale to EU countries were empty; however, Comveen’s customers paid in full for goods that they did not receive.
Paul Titherington, official receiver in the Public Interest Unit, said: “Comveen Ltd was involved in trading and making wrongful reclaims in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.
“This is not victimless misconduct, the main impact being on honest taxpayers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front-line services.
“Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.”
He added: “The Insolvency Service will not hesitate to use its enforcement powers to investigate and disqualify directors whose companies defraud the public purse.”
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