TWO SUCCESSFUL CUSTOMS VAT FRAUD PROSECUTIONS

26 Apr 2004 06:15 PM

A man was jailed today for seven years at Southwark Crown Court for his part in a 16 million Missing Trader (MTIC) VAT fraud. This follows an earlier sentencing today, where four men were sentenced to a total of 21 years imprisonment at Snaresbrook Crown Court in a separate MTIC fraud case.

Arthur Gilchrist, Customs Assistant Chief Investigations Officer said:

"The investigation of MTIC fraud is Customs' top VAT fraud priority and we will continue to tackle the criminals behind this. This type of fraud is not a victimless crime; it is robbing the honest taxpayer of monies that could used to fund essential public services.

"We will continue to clamp down hard on those who abuse the VAT system and this sentence should serve as a warning to all those involved".

Monmohan Singh Sandhu, 37, of Great Barr, Birmingham, set up Bestline Data Ltd in April 2001, supposedly to trade as a wholesaler of mobile phones in the UK, but in reality to claim back VAT to which he was not entitled. Although he had in his possession purchase invoices from a supplier called MS Coten Ltd, this company had never in fact traded with Bestline Data Ltd. The phones were being purchased directly from suppliers in Luxembourg, without VAT being charged, but Sandhu was claiming these had been bought in the UK, from MS Coten Ltd.

Proceedings have commenced to recover 6 million of Sandhu's assets.

Notes for editors

1. Over a 27 day period in June and July 2001 Monmohan Sandhu claimed to have bought 497,000 phones from MS Coton Ltd, a UK-based company, but paid the Luxembourg-based suppliers directly. The goods were then sold to a single UK customer. Over 110 million passed through the Bestline business bank account during this short time. An examination of the records of MS Coten Ltd revealed however that they had never traded with Bestline Data Ltd. In any event, as Sandhu had paid the Luxembourg suppliers directly, no input tax could have been reclaimed by Bestline.

2. Operation Vehicle concerned the importation of computer chips from the Republic of Ireland in February and March 2001, and traded through a number of buffer companies in the UK. When the chips were sold back to an Irish company, without payment of VAT, only to be imported again the 'carousel' started. Over a period of six weeks around 64 million went through the bank account of one of the companies involved in Ampthill, Bedfordshire. However the 7 million VAT due to be paid to Customs was siphoned off. A further carousel of importations was found to have been perpetrated in 2000, this time using a company in Hinckley, Leicestershire. The sum stolen then was 9 million. The four men convicted were:

* Paul Vass, 37, of Weybridge, Surrey, jailed for 8 years * Richard Anthony How, 37, of Shefford, Bedfordshire, jailed for 4 years
* Anthony Perkins, 64, of Bedfordshire, jailed for 4 years * A 35 year old man from Leicestershire, who cannot be identified for legal reasons, jailed for 5 years.

3. Missing Trader Intra-Community Fraud is a Europe-wide problem orchestrated by sophisticated criminals in a systematic attack on the VAT system. The criminal obtains a UK VAT registration in order to acquire goods VAT free from other EU Member States. They then sell the goods on at VAT inclusive prices and disappear without paying VAT back to the Government. In this case however, the criminal claimed to be buying the goods from a UK-registered company, but paid the EU supplier directly. No input tax ought to have been reclaimed, this being a supply of goods by the EU supplier. Output tax had been correctly paid, as the sale was to a UK customer.

4. The Government's strategy to tackle VAT Missing Trader fraud was introduced in September 2000 and in November 2002, as part of the wider VATS strategy, additional Government funding was provided to reinforce it.

5. Customs & Excise have deployed over 400 staff to tackle this type of fraud and aim to have halved fraud losses by the end of 2003-04, reducing the fraud by at least 750 million.

6. The Government introduced new legislative measures to complement Customs existing strategy in April 2003. One of these measures includes a provision which imposes subject to a series safeguards joint and several liability on any business that knew or had reasonable grounds for believing that VAT would go unpaid in a supply chain. This measure is targeted at those who actively participate in the fraud.

7. A new VAT Notice 726 "Joint and several liability in the supply of specified goods" is available on the Customs website or by phoning the Customs National Advice Service.

8. Customs has set up a dedicated team to support businesses in the computer, mobile phone, alcohol and road fuel trade sectors. The team can help businesses check the validity of another trader's VAT registration. Tel 01737 734516, 01737 734577, 01737 734612 or 01737 734761 (Businesses outside of these four trade sectors can check VAT registration details by telephoning the National Advice Service.)

If using specific facts contained in this release please check the information is still current.

Issued by HM Customs and Excise Marketing and Communications Division

For the attention of News Desks
Anyone with information about illegally imported drugs, tobacco or alcohol or about VAT or fuel fraud can speak to a Customs officer in complete confidence at Customs Confidential 24 hours a day on 0800 59 5000. Or fax 0800 528 0506, write to Freepost SEA9391, PO Box 100, DA12 2BR, or e-mail customs.confidential@hmce.gsi.gov.uk www.hmce.gov.uk