Excerpts and the full unedited (yet to be approved) transcript from the recent European Communities Select Committee on Missing Trader Fraud. If you have any interest in VAT fraud, this is a must read.
The excerpts below refer to a transcript from the Select Committee on the European Communities discussing Missing Trader Fraud, members and witnesses have yet to have the opportunity to correct the record.
Present –
Royston Ford – Cunningham Lindsay Marine
Angela O’Hara – Vodafone
Fred Howarth – Federation of Technological industries
Dr Michael Cheetham – Bond House Ltd
Lord Kerr of Kinlochard
Lord Cobbold
Lord Inglewood
Lord Jordan – Chairman
Lord Maclennan of Rogart
Lord Steinberg
(To put the excerpts below into context you will need to read the full 35 page transcript, these are a mixture of quotes from the above named individuals – the link to the transcript follows below.)
Chairman -Trader fraud is a bigger problem in the UK than in other European countries.
Ford – [we] have a reluctance to face up to the scale of the problem and that estimates from the HMRC have been somewhat on the low side - £2,5,7 Bn – Eurostat in July of last year recorded dramatically higher figures than HMRC ever have
Ford – universal reverse charge is the most likely variant of reverse charge to be successful
Chairman – fraud migrating to other groups of commodities
Ford – pharmaceutical, designer clothing, cosmetics, mineral water, computer software
Chairman – Government believe that carousel fraud in mobile telephones is on the way to being defeated and that the incidence is now going down
Ford – we have already seen this happening – I have concerns about the Government approach and the customs approach to this problem and what they describe as a crackdown on fraud in fact is a crackdown on the trade. Very little has been done to stop the fraud and prosecute the fraudsters, but the trade itself has been stopped.
Ford – this may not be a long-term solution
Lord Cobbold – MTIC fraud has become the largest growth criminal industry that Europe has seen in recent years.
Ford – I have worked extensively in the Middle East on these types of fraud where Dubai is of principle note – a genuine fear that this is funding terrorism
Ford – there are probably between 10 and 15 serious organised co-ordinators of VAT fraud – freight forwarding companies – essential for perpetrating this type of activity
Ford – it needs concerted investigation by law enforcement to uncover and prove the conspiracy, yet this is not being done. The trade has been paralysed by the withholding of VAT refunds and the denial of banking services, to mobile phone and CPU traders
Lord Steinberg – [are] the Serious Fraud Squad going into some of these freight forwarders?
Lord Steinberg – SFO, which unfortunately has not had a great success rate so far
Ford – the carousel traders have been very good at putting distance between the various nodes of the carousel networks – potential links into the terrorist funding
Chairman – not enough co-operation between agencies
Ford – linking HMRC intelligence units and police intelligence units. – enormous results in the Heathrow area.
Ford – First Curacao International Bank in the Dutch Antilles has produced some extremely interesting results on the money trail and money laundering
Howarth - within the UK, whether the traders are legitimate or not, and it is very difficult to discern, the level of due diligence being required by HMRC is almost endless. They seem to have an insatiable appetite for due diligence and no matter how diligent a trader is they are still experiencing extended verification. Now, there are many companies out there, members of the FTI included, who are on the verge of going into liquidation or who have gone into liquidation or are taking professional advice about ways to protect their investments. Many out there have houses which are mortgaged, loans, family loans and business loans, which are now causing them serious problems. We are not just talking about traders who have been trading three or four months but traders who have been trading for 18/20 years.
Lord Steinberg – I would assume that somebody who has been trading for 17 or 18 years has probably got a pretty unblemished career and, therefore, they should not be figuring in the hold-up of repayments
Howarth – there have been no repayments to any trader in a repayment situation within our industry since March of last year
For the full transcript –
http://www.publications.parliament.uk/pa/ld/lduncorr/eua270207.pdf
Present –
Royston Ford – Cunningham Lindsay Marine
Angela O’Hara – Vodafone
Fred Howarth – Federation of Technological industries
Dr Michael Cheetham – Bond House Ltd
Lord Kerr of Kinlochard
Lord Cobbold
Lord Inglewood
Lord Jordan – Chairman
Lord Maclennan of Rogart
Lord Steinberg
(To put the excerpts below into context you will need to read the full 35 page transcript, these are a mixture of quotes from the above named individuals – the link to the transcript follows below.)
Chairman -Trader fraud is a bigger problem in the UK than in other European countries.
Ford – [we] have a reluctance to face up to the scale of the problem and that estimates from the HMRC have been somewhat on the low side - £2,5,7 Bn – Eurostat in July of last year recorded dramatically higher figures than HMRC ever have
Ford – universal reverse charge is the most likely variant of reverse charge to be successful
Chairman – fraud migrating to other groups of commodities
Ford – pharmaceutical, designer clothing, cosmetics, mineral water, computer software
Chairman – Government believe that carousel fraud in mobile telephones is on the way to being defeated and that the incidence is now going down
Ford – we have already seen this happening – I have concerns about the Government approach and the customs approach to this problem and what they describe as a crackdown on fraud in fact is a crackdown on the trade. Very little has been done to stop the fraud and prosecute the fraudsters, but the trade itself has been stopped.
Ford – this may not be a long-term solution
Lord Cobbold – MTIC fraud has become the largest growth criminal industry that Europe has seen in recent years.
Ford – I have worked extensively in the Middle East on these types of fraud where Dubai is of principle note – a genuine fear that this is funding terrorism
Ford – there are probably between 10 and 15 serious organised co-ordinators of VAT fraud – freight forwarding companies – essential for perpetrating this type of activity
Ford – it needs concerted investigation by law enforcement to uncover and prove the conspiracy, yet this is not being done. The trade has been paralysed by the withholding of VAT refunds and the denial of banking services, to mobile phone and CPU traders
Lord Steinberg – [are] the Serious Fraud Squad going into some of these freight forwarders?
Lord Steinberg – SFO, which unfortunately has not had a great success rate so far
Ford – the carousel traders have been very good at putting distance between the various nodes of the carousel networks – potential links into the terrorist funding
Chairman – not enough co-operation between agencies
Ford – linking HMRC intelligence units and police intelligence units. – enormous results in the Heathrow area.
Ford – First Curacao International Bank in the Dutch Antilles has produced some extremely interesting results on the money trail and money laundering
Howarth - within the UK, whether the traders are legitimate or not, and it is very difficult to discern, the level of due diligence being required by HMRC is almost endless. They seem to have an insatiable appetite for due diligence and no matter how diligent a trader is they are still experiencing extended verification. Now, there are many companies out there, members of the FTI included, who are on the verge of going into liquidation or who have gone into liquidation or are taking professional advice about ways to protect their investments. Many out there have houses which are mortgaged, loans, family loans and business loans, which are now causing them serious problems. We are not just talking about traders who have been trading three or four months but traders who have been trading for 18/20 years.
Lord Steinberg – I would assume that somebody who has been trading for 17 or 18 years has probably got a pretty unblemished career and, therefore, they should not be figuring in the hold-up of repayments
Howarth – there have been no repayments to any trader in a repayment situation within our industry since March of last year
For the full transcript –
http://www.publications.parliament.uk/pa/ld/lduncorr/eua270207.pdf