VAT frauds distort trade deficit figures |
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Tue, 16 Aug 2005 03:35
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LONDON: VAT frauds are causing concern in the U.K. trade circles. Both the Revenue and Customs department and the Office for National Statistics have sent out warnings that these frauds are distorting the country's trade balance figures and the impact could be calculated in several millions of pounds.
The ONS has gone to the extent of describing the latest upbeat trade figures -- which showed a marked 71 million pound improvement in the difference between what the country's exports and its imports -- as exaggerated and would need to be revised.
Described by those in the know as the "missing trader fraud", it involves import of goods such as mobile phones free of VAT by some U.K. firms and then selling them in Britain with the VAT added.
However, the VAT is never paid to the Revenue and Customs department. Some fraudsters are also known to be buying goods in the U.K. before exporting them VAT-free to associates abroad. They then simply import these goods back, pocketing the profits and also the VAT, which is rightfully due to the exchequer.
ONS says the fraud had been there since 2000, but the perpetrators seem now to have spread their wings to new overseas markets hoodwinking customs officials. Earlier, they were confining their
areas of operation to EU countries, but now they seem to have entered countries outside the EU too, including Dubai, Hong Kong and Singapore. Trade figures indicate that exports to Dubai had gone up by 500 million pounds between May and June, ONS points out. ONS estimates that such frauds would have cost the government between 1.06 billion and 1.73 bullion pounds a year.
A Revenue and Customs department spokesperson said his department is analysing recent trade data to determine if this impacts on balance of trade figures.
He said the department is well aware of the missing trader fraud, and it had been successfully tackling it since 2000. "As often happens when tackling organised crime, our success has prompted changes to the fraud including, in this case, changes to the underlying pattern of trading," he said.
The department has recently prosecuted four fraudsters, who were found to have cheated the government to the tune of 40 million pounds in owed tax revenue. Their names were given as Stephen Pigott, Stacey Haber-Hofberg, Joanna Harris and Theresa Igbanugo. They are facing court sentences now.
The four had used fake VAT receipts to bring and sell mobile phones. The The proceeds were sent to a series of bank accounts in Hong Kong.
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