Customs committed to carousel fraud battle

Link: ‘Carousel fraud’ costing UK billions

In the past year, investigators saw an upturn in this type of fraud, which KPMG says is still ‘dogging’ Customs’ best efforts to clamp down on it.

This type of fraud is perpetrated by businesses which import goods from a zero-rate VAT source, sell them with VAT included, then pocket the difference, instead of paying it to Customs. This loss of Revenue is estimated at between £1.7bn and £2.75bn annually.

Now Customs claims it has succeeded in stabilising the ‘previous rapid growth in losses from carousel fraud. ‘Already more than 400 officers are dedicated to identifying and tacking this serious criminal activity,’ a spokesperson said.

‘But we still have more to do and a package of targeted measures, announced in this year’s Budget, will strengthen our efforts and build on our success in tackling carousel fraud.

The anti-fraud measures introduced in the April 2003 Budget include the imposition of joint and several liability of unpaid VAT on specific commodities for business in the same supply chain; allowing Customs to deny recovery of VAT in circumstances where the taxpayer holds an invalid VAT invoice and is unable to demonstrate that they took reasonable steps to prove the supply; and extending existing security powers so that security can be required from any business involved in a supply chain where there is evidence of actual or potential fraud or evasion.