Carousal VAT fraud cases suspended
Customs & Excise has frozen up to 70 VAT fraud prosecutions after it was claimed the department withheld vital documents from defendants, claims the Financial Mail.
The cases relate to VAT frauds involving mobile phones and computer chips, the so-called ‘carousel fraud’ scams. The largest case involved a £162m loss to the British taxpayer, and it is believed that £2bn a year is lost in total to the scams.
The scams exploit a loophole in European Single Market rules where VAT is only paid on transactions inside EU countries, but not on trades between them.
Companies would import goods VAT-free from other EU states and then sell them on in Britain, charging VAT.