JAIL FOR £57M VAT FRAUDSTER

17 Jun 2006 12:15 PM

A fraudster was today sentenced to six years imprisonment for his part in an estimated £57m mobile phone VAT scam following a lengthy investigation by HM Revenue & Customs (HMRC).

Mark Selby pleaded guilty at the Royal Courts of Justice to his involvement in a Missing Trader Intra Community (MTIC) VAT fraud involving the bogus sale of mobile telephones between May 2002 and May 2003. He was sentenced to five years imprisonment for cheating the Revenue, six months imprisonment for associated money laundering offences and six months imprisonment for each of five counts of contempt of court. The contempt of court sentences are to run concurrently, but consecutive to sentences for the other two offences.

Robert Gray, HMRC Assistant Chief Investigation Officer said: "Tackling this type of crime is HMRC's top fraud priority. MTIC fraud is a deliberate attack on the VAT system, perpetrated by organised criminals operating across and beyond the EU. The theft of huge sums of taxpayers' money has a direct effect on the Government funds that are available to spend on public services such as schools and hospitals.

"Today's sentence is a further example of HMRC's determination to bring to justice the criminals involved in this type of fraud and also vigorously pursue the recovery of their criminally derived assets."

The fraud was operated through various companies that were set up to trade in mobile telephones, including Selby's company, Maple Link France (SARL). During the period £326.5 million was credited to Mr Selby's company account as payment for telephones sold
to twelve UK companies.

He also supplied mobile phones to Spanish traders who in turn supplied the same 12 UK companies. These UK companies then failed to pay the VAT due to HMRC. The total VAT stolen amounted to approximately £57 million. It is believed that Selby's personal profit from the scam amounted to around £1.5 million.

An analysis of the trading chains reveals that there was no legitimate commercial sense in the buying and selling of the telephones. It was not necessary for there to be any commodity. The profit element in the transactions was solely in the stolen VAT.

Much of the proceeds from the fraud ended up in either Mr Selby's personal account, the account of Maple Link or was transferred to accounts held abroad. Mr Selby worked from his base in France. However, the company bank account is in London.

HM Revenue & Customs officers arrested Selby and applied for his extradition from France to the UK and this took place in November 2004.

This case was successfully prosecuted by the Revenue and Customs Prosecutions Office (RCPO). RCPO is an independent prosecuting authority that reports to the Attorney General, and is responsible for the prosecution of all HMRC cases.

Notes for editors

1. Mr. Selby was born on 9 February 1967 and is a British national.

2. Mr Selby was charged with Cheating the Public Revenue and money laundering.

3. HMRC has applied for a confiscation order and the hearing will take place at a future date.
A photo of Mr Selby is available from HMRC press office on request.

4. Missing Trader Intra-Community (MTIC) VAT fraud is an organised criminal attack on the VAT system, which is estimated to have cost the UK exchequer between £1.1bn and £1.9bn in stolen VAT revenues in 2004-05. In its simplest form this type of fraud involves obtaining a VAT registration number in the UK for the purposes of purchasing goods free from VAT in another EU Member State, selling them at a VAT-inclusive purchase price in the UK and then going missing or defaulting without paying the VAT due to HMRC. A more abusive form of the fraud - known as carousel fraud - involves the same goods being traded around contrived supply chains within and beyond the EU, re-entering the UK on a number of occasions with the VAT being stolen each time. The goods most commonly associated with this fraud are mobile phones and computer chips. The organised criminal networks behind these frauds are well resourced, innovative, resilient and known to be involved in wider criminality including armed robbery, kidnapping and drugs smuggling.

5. HMRC's strategy for tackling MTIC fraud aims:

* To stop the fraud before it can begin - by identifying bogus businesses and refusing to register them for VAT purposes; * Where fraudulent trading begins, to identify and stop it at the earliest opportunity - by operating close controls on suspect businesses and those trading in affected sectors; and
* Where it cannot be stopped, to disrupt the fraud - by tackling all points in the supply chains and those orchestrating them, using the full range of criminal and civil measures available to us and working closely with UK agencies and authorities abroad to identify and target suspect activity.

In response to increasingly sophisticated tactics by the fraudsters and an increase in activity associated with MTIC fraud, HMRC has strengthened its MTIC strategy through:
* operational improvements, including strengthening checks at registration to better identify fraudulent and bogus applications, redeploying additional compliance officers to verify repayment claims from businesses trading in suspect supply chains and using barcode scanning technology to better identify goods involved in the fraud; * work to strengthen international co-operation with both EU Member States and non EU countries;
* a tougher approach to litigation with increased specialist resource targeted at criminal investigation; and
* legislative measures in this year's Finance Bill to
clarify/strengthen UK powers.
In addition the Government has applied to the European Commission for a derogation to introduce a reverse charge accounting system for goods commonly used in MTIC fraud. This would effectively remove VAT from business-to-business transactions.

6. The Revenue & Customs Prosecutions Office (RCPO) was created by Royal Assent on 18 April 2005. An independent prosecuting authority, RCPO reports directly to the Attorney General, and is responsible for prosecuting some of the largest drug and fraud cases in the UK. For further information please contact the RCPO press office on 020 7865 5666.

Issued by HM Revenue & Customs Press Office
Website www.hmrc.gov.uk