St Pauls Chambers have a number of members who have defended and prosecuted in VAT carousel fraud cases. These are often extremely complex and document-heavy cases. St Pauls Chambers offer a complete service and are able to advise clients, and provide expertise, at all stages of carousel VAT fraud cases.
Carousel fraud, also known as Missing Trade Intra-Community (MTIC fraud) or missing trader fraud, is an example of VAT fraud. It involves cases where VAT rules have been ignored, averted or abused during transactions of imported goods between different EU member states.
Carousel VAT fraud is a complicated and highly sophisticated process which is very difficult to detect. Here, we explain the missing trader fraud process in five steps:
As you can see, carousel VAT fraud can continuously cycle, which is why it’s described as a carousel.
Missing trader fraud scams are often conducted by organised crime groups who link illegitimate companies or individuals across borders to facilitate their activity. They often disguise such connections and use fake names and contact details. As a result, this makes it more challenging for HMRC to track them down.
Both tangible and intangible goods are targeted in missing trader fraud scams. Sectors that are frequently targeted include telecoms, mobile phones and other high-value electronic goods, precious metals and gas.
Often, cases of carousel fraud involve innocent businesses and, in the past, this has caused for these businesses to lose out. This is because HMRC would hold back VAT repayments to these innocent businesses as the VAT was not given in the first place by the missing trader. However, carousel vat fraud now costs the HMRC a great deal in lost tax avoided by fraudsters. According to a European Parliament report, it is estimated that, in 2015, the UK government lost between £0.5 billion to £1 billion from such scams.
Not only is MTIC fraud damaging to the innocent businesses and HMRC, but it’s also damaging to the general public. With heavy VAT losses, the Government loses money that could have potentially be spent on the provision or improvement of public infrastructure and services, such as schools, public transport and hospitals. This is why it’s vital for legitimate businesses and HMRC to be extra vigilant.
Highly-organised criminal groups typically conduct VAT carousel fraud, and it is common for these criminals to use the fraudulent money they have illegitimately collected for the funding of other criminal activities, such as drug trafficking or terrorism.
If you are under investigation for carousel VAT fraud, you will receive a letter from HMRC or a tax audit notice. Upon receiving a letter from HMRC, you should seek out a specialist carousel fraud barrister to provide you with expert legal advice and guidance. The consequences of a carousel VAT fraud conviction are serious, but with the guidance of an experienced carousel fraud barrister, you have the best chance of achieving a positive result.
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