This scheme, known as ‘carousel fraud’, exploits the fact trade between European countries is exempt from VAT, according to a story in the Observer newspaper.
Hi-tech goods such as mobile phones and chips for upgrading computers are sold between companies in different countries that are really owned by the same person. The second company is then eligible for a VAT refund from the government.
It is thought dissident and terrorist groups use the scam to launder money from criminal activities at the government’s expense.
Unchecked proceeds from the crime are set to double inside two years.
Report argues that the government must change the way it makes tax and budget decisions
Drastically fewer offices for HMRC in the hope to reduce their running costs
Tayabali Tomlin and d&t directors launch £20 a month TaxGo service, aiming to be the 'biggest UK firm' by client numbers
Companies must report on their complex financial structures including offshore accounts and notify HMRC