The massive threat of carousel fraud
You’ve probably never heard of it. But HM Revenue & Customs (HMRC) reckon that it accounted for a record £7.4 billion of imports and exports in the first quarter of the current financial year . That represents a six-fold increase in a year. That means that this financial year the total losses to the Exchequer could be around than £35 billion. According to an article in the “Guardian”, that is the equivalent to 3p on the basic rate of income tax.
Carousel fraud involves a circular trade of cross border purchases, typically of computer chips or mobile phones, between connected companies, and sometimes controlled by criminal syndicates. In its simplest form, a fraudster imports goods from a zero-rate VAT source, sells the goods with VAT included and then disappears without passing the VAT onto Customs.
Apparently Revenue & Customs has 1,000 investigators working on the frauds – but this ought to ba massive political issue. If a political party went into an election promising to add 3p to the burden on taxpayers or to cut 3p off the tax rate, it would be a sensation. But this huge scale of fraud barely makes the news.