VAT investigations often have numerous aspects such as interviews under caution by the investigating body. Each agency has different powers, some more wider reaching than others.
Other aspects could be:
Many businesses come under VAT scrutiny; however those some businesses are deliberately targeted by HMRC. These are often the telecommunications industry, businesses selling computer components and more recently companies involved in carbon emission trading. The HMRC have put various measures into place to try and stop these activities as they occur. The reverse charging mechanism is one example. In addition the VAT charged on carbon trading certificates was changed.
This specialist type of fraud basically involves goods being imported VAT free from EU countries and sold on at VAT inclusive prices. The company at the beginning of the chain then disappears without paying HMRC the VAT charged when selling the goods on. These companies are know as ‘missing traders’, ‘hijacked traders’ or ‘defaulting traders’. The goods are then sold down a chain of companies known as ‘buffer’ companies. These companies are used to disguise the paper trail of the fraud. Finally the last company in the chain exports the goods to the EU (or elsewhere) free of VAT. As this company had already paid VAT on its purchase of the goods from the supplier the company then reclaims the VAT back. If this was a legitimate trade then a reclaim of VAT is allowable. The same goods are often imported again into the UK and the chain starts again. This is how the fraud became known as a ‘carousel fraud’ due to the same goods going round again and again.
Cases involving MTIC fraud are complex often due to the number of businesses involved in the chain and the trading relationship. It can be difficult to unravel and demonstrate what has occurred and what has knowingly occurred in relation to VAT. The issue of knowledge is extremely important.
Our fraud team has extensive experience in dealing with those facing prosecution and trial for large scale carousel fraud. Defendants could face lengthy terms of imprisonment if convicted and action under the Proceeds of Crime Act. Trials often last several months, creating havoc for individuals and businesses facing these allegations. We have detailed knowledge of the legislation and compliance requirements relating to this area and our team are highly skilled at proactively defending these charges, particularly conspiracy to defraud or conspiracy to cheat Her Majesty’s Revenue.
Our experienced team of serious fraud lawyers has the expertise and knowledge to look at the required level of detail to defend you. Contact our expert fraud solicitors on 0203 816 1098 or complete our online enquiry form.