HMRC adds muscle to missing trader fraud fight

HMRC today vowed to continue its crusade against perpetrators of missing
trader intra community (MTIC) fraud with the launch of a new strategy to clamp
down on the activity.

MTIC fraud has been on the increase over the last year, costing the
government between £1.12bn and £1.9bn in 2004/2005, prompting HMRC to bolster
its armoury.

The new strategy will see HMRC introduce tougher registration requirements
for VAT numbers, increase the use of provisional liquidation, monitor goods used
in MTIC frauds, tighten up VAT repayments and target the ring leaders of MTIC

‘MTIC losses are increasing and government is determined to tackle this
fraud. ‘These criminals are resilient and the new strategy is aimed at the
changing nature of their operations,’ said HMRC law enforcement director Mike

MTIC fraud involves a chain of fraudsters who recycle batches of goods in
order to claim VAT illegally. Typically, schemes involve distributors forwarding
on goods to traders who will sell them on, with VAT included in the price, to a
third party. The trader will then either disappear or default on the VAT it
owes, while the third party will claim back the VAT it paid on the goods and
send them on to the original distributors.

The Big Four, meanwhile, have joined forces with HMRC to fight MTIC fraud. In
a joint statement issued today the firms committed to increasing awareness off
MTIC fraud and advising clients who were at risk of becoming involved in the
carousel frauds.

‘We take and will continue to take all reasonable measures to work only with
legitimate business and traders in such supply chains, through our individual
firm client acceptance and continuance procedures,’ the Big Four said.

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