The Office for National Statistics has warned that ‘missing trader fraud’ has
so skewed UK trade figures that it can no longer have any confidence in them.
Missing trader fraud occurs when a trader imports merchandise to the UK,
sells the goods with VAT included in the price, and then leaves the country
without paying the VAT to the government.
The Guardian reported that this practice had the potential of
costing the state billions of pounds in lost VAT revenues, although the ONS said
it was impossible to quantify the extent of the fraud at this stage.
‘We can’t put a number on it. We have no handle on the scale of it. The
problem has only been brought to out attention in the past 10 days,’ Caroline
Lakin, who compiled the figures, told The Guardian.
The ONS figures showed showed a £500m leap in exports from Dubai in June when
compared with the same month last year, and a £144m increase in exports from
Russia. The ONS said it had launched an investigation into the matter, but added
that it was to early to say which countries were involved.
David Willetts, shadow trade and industry secretary, said it was ‘shocking’
that VAT fraud was occuring at such a level that it was skewing trade
‘The government has known about this for some time, but hasn’t come
clean.[Gordon] Brown goes about closing tax loopholes, but he’s much better at
imposing stealth on the rest of us than catching the real fraudsters,’ Willets
was quoted as saying.
The ONS said the goods trade deficit narrowed to £4.3bn from £5bn, the
smallest deficit for over a year. The problem of VAT fraud, however, watered
down what would otherwise have been a positive set of figures.
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