HMRC instigates first carbon fraud raids
Nine arrests made in connection with alleged VAT fraud through carbon emission trading
The taxman has instigated the first set of UK arrests for alleged carbon tax
evaders. Nine people including seven men and two women were arrested in the
Gravesend and Greater London areas for over £38m worth of fraudulent VAT
reimbursements on carbon trading.
Just fewer than 30 properties, both residential and business, were raided. A
HMRC spokesman confirmed that all nine suspects have been bailed with no charges
as yet having been made in connection with the fraud.
It is believed that the suspects were part of an organised crime group
operating a network of companies trading in large quantities of carbon credits.
Fraudulent companies purchase carbon emission allowance credits abroad, which
are VAT free. They then sell them to businesses in the UK at a VAT inclusive
price. The VAT charged by the fraudulent companies is never paid to HMRC.
HMRC recently announced that it was implementing a zero rate of VAT on all
carbon trading in the UK to prevent this type of VAT fraud which have been
widely seen on the continent particularly France.
Another way that fraud can take place is that a company selling carbon
emission allowances, also known as carbon credit, disappears or goes into
administration before paying the VAT on the sale. Meanwhile the company which
had paid for VAT on the purchase of carbon credits is reimbursed by HMRC without
the taxman having received any VAT payments.
A HMRC spokesman said although there is now a zero rate of VAT on carbon
trading: ‘We will relentlessly pursue VAT fraudsters.’
‘We will continue to investigate all frauds’ he added.
Les Beaumont, deputy director of criminal investigation for HMRC said: ‘HMRC
investigates all criminal attacks on the tax system, halting theft of revenue,
gathering evidence and supporting prosecutors in bringing offenders before the
courts.’