"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Wednesday, March 12, 2008

VAT Carousel Fraud - HMRC still don't know how much is going on... That's OFFICIAL

Thursday, March 06, 2008 UK Trade for 2007 - Exports down 10% - Imports up , Carousel VAT fraud stopped rising as well

When writing the piece about the Trade Statistics published that day , we took, as usual , the precaution to check any data we use. So on 6th March we e-mailed Jan Marszewski /Press Officer, Business Desk /HM Revenue & Customs jan.marszewski@hmrc.gsi.gov.uk

Could you please advise me as to the reasonableness / unreasonablness of the statement :

"However if adjustments are being made of £8Bn of trade transactions in 1 Quarter are being made then at a generous 10% = $800 Mn. of VAT per Qtr = £3.2 Bn. a year is still going missing in VAT payments. "

We received a reply from Jan just minutes ago ...

I have been asked to reply to you on behalf of my colleagues in the Trade Statistics team.

In answer to your questions:
A comparison of of 2007 data with 2006 data totals at this stage could lead to miscalculations, as the 2007 data is provisional until August 2008.

The 2006 figures quoted have been revised and the missing declarations were not the same for each subsequent quarter. You cannot extrapolate in this way, the figures for all of 2006 have been published (not now provisional). Does this refer to 2006 or 2007?

The estimates of missing trade declarations associated with MTIC fraud have since been revised. The figures are available on our Web site http://www.uktradeinfo.com/ or from the ONS site http://www.statistics.gov.uk/pdfdir/trd0208.pdf .
This will also include figures for 2007, but they are provisional ,

As stated in the article quoted, you cannot estimate VAT loss from these figures, as there is not a direct relationship.

No mention if it reasonable, but we stick to a VERY conservative estimate of 10% of the gross MITC declarations. ...to be fair they DIDN't say it WAS unreasonable.

Taking up the link offered below (HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE ---- Total Network SL (a company incorporated in Spain) (Original Respondents and Cross-appellants) v Her Majesty’s Revenue and Customs (suing as Commissioners of Customs and Excise) (Original Appellants and Cross-respondents)
[2008] UKHL 19) will take some reading however this became apparent

"As the Court of Appeal observed in para 3 of its judgment, this type of fraud is not confined to the United Kingdom. It is common in other countries within the EU. It has been described as a sophisticated attack on the VAT system. It was estimated to have cost in excess of £1bn in the year 2004/2005 to the United Kingdom by way of lost revenue. The Commissioners refer in their written case to estimates that show that this figure was exceeded substantially in the succeeding financial years. There is no doubt that this is a pernicious stratagem, and that member states are justified in making use of every means at their disposal within the scope of the Sixth Directive to eradicate it."

To those unfailiar with how this fraud is perpetrated ..

"7. It is sufficient for the purposes of this case to summarise the details of the first of the thirteen conspiracies alleged in the Statement of Claim. It has been treated as representative of all of them. On or about 15 October 2002 Total sold 3,780 Nokia mobile phones to Redlaw Ltd, a company incorporated in England and Wales, for £1,672,224.75. On the same day Redlaw sold the mobile phones to Lockparts Ltd for £1,423,170 plus £249,054.75 as VAT, amounting in total to £1,672,224.75. On the same day Lockparts sold them to GAK Ltd, for £1,428,840 plus £250,047 as VAT, amounting in total to £1,678,887.

Both Redlaw and Lockparts thereafter ceased to trade and did not pay the VAT due on these transactions. On the same day GAK sold the mobile telephones to The Accessory People plc, for £1,436,400 plus £251,370 as VAT, amounting in total to £1,687,770. On the same day The Accessory People sold them to Alldech Ltd, the broker, for £1,447,740 plus £253,345.50 as VAT, amounting in total to £1,701,094.50. In due course GAK and The Accessory People paid
VAT on the transactions which they had entered into. Finally, on the same day Alldech sold the mobile telephones to Total for £1,508,220.

That sale, being a sale out of the United Kingdom, was zero-rated.Alldech claimed and was paid a refund of input tax from the Commissioners which included the sum of £253,345.50 of VAT which it had paid to The Accessory People."

Which is not bad pay for day's work shuffling Invoices about....or as one of the learned Judges remarked..

…”The telephones, if they existed, did not physically move from the place or custody in which they were in the morning of 15 October 2002, when the carousel began, to anywhere else or anyone else’s custody by midnight."


Anonymous said...

recent ruling from Lords here

Shutter said...

Thanks, you are obviously very well informed. As far as I can see that makes it about 15 / Love ?

It will take some time to read but there is an awesome amount of information to satisfy the desires of any wannabe fraudster on hw to set it all up.

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish