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| Version 1 | Version 2 |
|---|---|
| VAT fraud arrests after dawn raid | VAT fraud arrests after dawn raid |
| (20 minutes later) | |
| UK customs officers have arrested 15 people on suspicion of a massive tax fraud, following dawn raids across four European countries. | UK customs officers have arrested 15 people on suspicion of a massive tax fraud, following dawn raids across four European countries. |
| The arrests form part of the UK's push against carousel fraud, a tax evasion scam that cost the Treasury between £2bn and £3bn in 2005-6. | The arrests form part of the UK's push against carousel fraud, a tax evasion scam that cost the Treasury between £2bn and £3bn in 2005-6. |
| HM Revenue and Customs said 300 of its investigators had taken part in raids in the UK, France, Spain and Germany. | HM Revenue and Customs said 300 of its investigators had taken part in raids in the UK, France, Spain and Germany. |
| All but one of the men arrested was British, the other being Dutch. | All but one of the men arrested was British, the other being Dutch. |
| The arrests took place in London, Glasgow, the Midlands and Cheshire, after the investigators executed 50 search warrants in locations across the UK. | The arrests took place in London, Glasgow, the Midlands and Cheshire, after the investigators executed 50 search warrants in locations across the UK. |
| HMRC said it expected to make further arrests as the day progressed. | HMRC said it expected to make further arrests as the day progressed. |
| "The scale of the problem across Europe is unprecedented, and HMRC has significantly strengthened its response to this serious fraud," said Euan Stewart, HMRC's deputy director of criminal investigations. | "The scale of the problem across Europe is unprecedented, and HMRC has significantly strengthened its response to this serious fraud," said Euan Stewart, HMRC's deputy director of criminal investigations. |
| The customs operation is believed to be connected to the closure in September of a Caribbean bank alleged to have been a clearing house for laundering the proceeds of MTIC fraud. | |
| Round and round | Round and round |
| Organised VAT fraud has become a huge issue for the UK in recent years. | Organised VAT fraud has become a huge issue for the UK in recent years. |
| The most virulent example is known as MTIC ("Missing trader intra-community") fraud, and in its simplest form involves the importing of goods from other countries in the European Union. | The most virulent example is known as MTIC ("Missing trader intra-community") fraud, and in its simplest form involves the importing of goods from other countries in the European Union. |
| How the carousel works | How the carousel works |
| Goods traded between EU countries are VAT-free - so the importer sells them on in a string of fraudulent transactions then re-exports them, claiming back VAT which was never paid in the first place. | Goods traded between EU countries are VAT-free - so the importer sells them on in a string of fraudulent transactions then re-exports them, claiming back VAT which was never paid in the first place. |
| RAID LOCATIONS LondonGlasgowBirminghamWolverhamptonStaffordCongletonMacclesfieldWeston, CheshireCardiffManchesterDoverBristolParisHamburgBarcelona | RAID LOCATIONS LondonGlasgowBirminghamWolverhamptonStaffordCongletonMacclesfieldWeston, CheshireCardiffManchesterDoverBristolParisHamburgBarcelona |
| HMRC is obliged to pay up unless it can prove that the VAT due on the goods, when they were sold after importation, was never actually collected. | HMRC is obliged to pay up unless it can prove that the VAT due on the goods, when they were sold after importation, was never actually collected. |
| In more advanced and lucrative forms of the fraud, the same goods - usually small, high-value items such as computer parts or mobile phones - are sent over and over round a chain of trades through multiple countries. | In more advanced and lucrative forms of the fraud, the same goods - usually small, high-value items such as computer parts or mobile phones - are sent over and over round a chain of trades through multiple countries. |
| This roundabout practice - in which the goods are often in fact non-existent and the trading automated - has led to the technique being dubbed "carousel fraud". | This roundabout practice - in which the goods are often in fact non-existent and the trading automated - has led to the technique being dubbed "carousel fraud". |
| High cost | High cost |
| So far in 2006, more than £26bn worth of trade associated with the fraudulent imports and exports has been recorded by HMRC - although this has tailed off in the last few months, because of various anti-avoidance measures. | So far in 2006, more than £26bn worth of trade associated with the fraudulent imports and exports has been recorded by HMRC - although this has tailed off in the last few months, because of various anti-avoidance measures. |
| The prevalence of carousel fraud has hit UK trade statistics, as well as robbing the taxpayer of billions. | The prevalence of carousel fraud has hit UK trade statistics, as well as robbing the taxpayer of billions. |
| HMRC now has 1,500 staff working on MTIC fraud, and is trying to get the EU to allow a change in the VAT payment rules so that with particularly vulnerable goods, the tax is only charged in the final, retail transaction. | HMRC now has 1,500 staff working on MTIC fraud, and is trying to get the EU to allow a change in the VAT payment rules so that with particularly vulnerable goods, the tax is only charged in the final, retail transaction. |
| Since April, nine prosecutions have taken place in carousel fraud cases, following the conviction of 18 people in the previous 12 months. | Since April, nine prosecutions have taken place in carousel fraud cases, following the conviction of 18 people in the previous 12 months. |
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