Carousel fraudster gets 15 years

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A man who organised the theft of £54m in value added tax (VAT) in a carousel fraud has been jailed for 15 years.

Emmanuel Hening, with dual Belgian and French nationality, was convicted at Worcester Crown court after two trials and a six-year long investigation.

He was described as the guiding hand behind a gang of eight who have been jailed for a total of 38.5 years.

The fraud involved the repeated import and export of mobile phones, allowing the gang to fraudulently reclaim VAT.

They did this by importing the phones free of VAT from the EU, trading them in the UK while failing to collect the tax, but then claiming a VAT refund when the goods were re-exported.

"This was not some kind of victimless crime, but organised fraud on a massive scale perpetrated by criminals all bent on making fast and easy profits at the expense of the British taxpayer," said Chris Harrison of HMRC.

"This was theft of revenue needed to fund our country's public services," he added.

Mobile phones

Carousel fraud was recently described by the Chancellor Gordon Brown as one of the biggest threats yet seen to the UK tax system.

In last autumn's pre-budget report he revealed that the Exchequer had been cheated of between £2bn and £3bn in lost VAT by carousel fraudsters in the 2005-06 financial year.

HMRC began investigating Hening in 2000, tracking the flow of mobile phones he purported to be trading between the UK, France and Luxembourg.

The authorities discovered that he seemed to be importing large numbers of European mobiles into the UK, with two-pin plugs, far in excess of any legitimate demand.

The phones then passed through a series of bogus "buffer" trading companies in a contrived supply chain that had been set up by accomplices in the West Midlands, Lancashire and the Isle of Man.

This created a paper trail to legitimise the movement of the phones even though at no stage was VAT collected and passed onto HMRC.

Two trials

Two other members of Hening's gang were convicted at his trial last December, while five others were convicted last June.

At Worcester Crown Court Judge McCreath said it was fraud on a massive scale and an orchestrated attack on the UK tax system.

A woman who was one of those convicted is still awaiting sentence.

Reporting restrictions were only lifted this month.