"“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

Friday, April 24, 2009

Alastair in Wonderland's Budget - the dog that didn't bark

Regular readers will be aware we have followed the massive losses to the HMRC of VAT due to Missing Trader Fraud (MTIC).

This was running at an "estimated" £400 Mn a month (that's £4 Billion a year) for several years.

This is the last mention by Alastair of this black hole in his 2007 Pre-Budget report October 2007

At Page 98 we have ....

5.104 New estimates of Missing Trader Intra Community (MTIC) fraud, published today,show that the scale of attempted fraud fell by up to £1.5 Bn.in 2006-07, to between £2.25 Bn. and £3.25 Bn. The estimated impact on VAT receipts fell to between £1 Bn. and £2 Bn. These reduced estimates demonstrate the success of the Government’s strategy for tackling MTIC fraud. HMRC will take further steps to apply both criminal and civil sanctions to those who are found to be knowingly involved in fraudulent trading.
But does add .Changes in trade associated with VAT MTIC fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of caution.

To this you can add as detailed by Mr Murphy of Tax Research at the date of that PBR ...

- 14.2% of VAT is not collected. Current cost (my estimate based on HMRC data) - £13.24 billion

- £400 million of duty on spirits is not collected

- 13% of cigarettes are smuggled - cost £1.65 billion

- 56% of hand rolled tobacco is black market - cost £750 million

- £350 million of diesel duty is evaded in the UK

- 43% of all diesel duty is evaded in Northern Ireland (people cross the border) - cost £210 million

To which he adds .

- 13% of tax due by those subject to self assessment is lost

- 1.2% of PAYE and NI due on small and medium sized payrolls is lost

- About 14% of tax due by small and medium sized companies is lost.

The losses on that lot come to £5 billion - but their data is up to 5 years out of date - amazingly.

I’ve reflected on this data. Extrapolating the average tax lost on direct taxes and those taxes that probably behave like them and applying this to 2007/08 HMRC data then total direct tax losses might be £17.6 billion, VAT might be £13.2 billion and other indirect taxes £4.8 billion - a loss of £35.6 billion.

No wonder when it cam to calculating expected tax take darlin Alastair kept quiet.

.... remember, of the £Billions lost in MITC a mere few million have been recovered, although a few people are cooling their heels at HM pleasure.


Anonymous said...

Almost all of the companies I know of involved in MITC have links, which brings one to the conclusion that there is one overall body whether it be a person, group of people, organisation or government running the frauds.

gyges said...


This is extremely difficult to get any concrete data on. Eg, the Costello murder seems to have dropped off the news feeds never to be seen again. Can you post the links to the companies you mention?

Anonymous said...

What's the Costello murder?
I know of the Costello affidavit which outlines state participation in excise fraud. The provenance of the affidavit was 'investigated' by the Metropolitan police. The investigation was so flawed that they failed to interview the two key witnesses, which of course draws the inevitable conclusion that the affidavit is authentic.
I'd like to know about the Costello murder in relation to excise/VAT fraud.

gyges said...

@anon 3.01pm

I could have simply got my facts wrong. I remember a story about someone walking home from the pub with his girlfriend and being arrested by two bogus policemen. Six months or so later his body parts were washed up on the east coast of Scotland. I've tried to relocate links to the story but I can't. I thought the name of that chap was Costello.

Hope that helps. If you can use google better than I, please post your results.

Anonymous said...

The name of the guy was Andrew Ramsay

gyg3s said...

@anon 6:08pm

Thanks for the clarification.

For the avoidance of doubt I'd like to say that I had my wires crossed.

Thanks again to anon6.08pm.


Anonymous said...

“We really do have the best government money can by”…


Anonymous said...

24 May 2009

"China warns Federal Reserve over 'printing money'"

"China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds."...


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