News In Focus
16 August 2006
Biggest ever VAT fraud investigation
Glasgow was one of three cities targeted yesterday in Britain's biggest-ever VAT fraud investigation.
A total of 60 business and home addresses in Glsgow, Manchester and London were searched in an operation involving 400 officers from HM Revenue and Customs (HRMC) and 100 police officers.
Early-morning raids led to 22 people being arrested across the UK, 15 of them in Glasgow.
The type of fraud being investigated involves buying goods in another EU member state free of VAT and selling them on in the UK with 17.5% VAT added. The selling company is then closed down without the tax being paid to HMRC. Sometimes the purchaser will re-export the goods and claim back the VAT it has paid.
Goods can go round and round in this way, creating the "carousel" which sees the name given to this type of fraud.
Known as missing trader intra-community (MTIC) VAT fraud, it is a very lucrative form of crime and was estimated to have cost the UK exchequer between £1.1 billion and £1.9 billion last year.