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£300M Vat Fraud, But How?


Redcellar

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Can anyone explain how this story works?

When you make a sale you pay VAT to the HMRC, not claim it back. When you buy goods you can claim VAT back from what you paid.

Cranswick was director of the Sheffield-based Ideas 2 Go which generated paperwork from fake sales to claim back VAT.

So how did this scam work? BBC describes it as fake sales and claiming back the VAT on the sales. Doesn't make sense to me. The fake sales invoices would have attracted VAT payments to HMRC and not refunds.

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It's what they call carousel fraud.

Effectively goods are imported (no VAT) by company 1, sold on to a connected party "company 2" (say £1m VAT) who then sells them on to an overseas company (no output VAT).

Company 2 can recover the £1m input VAT paid, company 1 is supposed to pay this over to HMRC but instead disapears oweing the money - result HMRC £1m out of pocket.

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It's what they call carousel fraud.

Effectively goods are imported (no VAT) by company 1, sold on to a connected party "company 2" (say £1m VAT) who then sells them on to an overseas company (no output VAT).

Company 2 can recover the £1m input VAT paid, company 1 is supposed to pay this over to HMRC but instead disapears oweing the money - result HMRC £1m out of pocket.

I can see that. Makes sense. BBC report is rubish then as it infers only fake sales occured. It's the fake 'buying' part that is the fraud that does the damage. Why not report it as company B claimed to have bought billions in goods which never existed, and claimed back the VAT on these fictitious goods.

The sales part is irrelevant as it is just there to keep the scam going. You've got to pretend the inventory went somewhere.

The article played up the sales part, saying stolen company identities and fake companies.

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I can see that. Makes sense. BBC report is rubish then as it infers only fake sales occured. It's the fake 'buying' part that is the fraud that does the damage. Why not report it as company B claimed to have bought billions in goods which never existed, and claimed back the VAT on these fictitious goods.

The sales part is irrelevant as it is just there to keep the scam going. You've got to pretend the inventory went somewhere.

The article played up the sales part, saying stolen company identities and fake companies.

They are trying to crack down on it by changing the way the VAT is handled

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_025730&propertyType=document

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No Goat what he and his team dis was not carousel fraud, it was a variation on it. He printed bogus invoices from uk traders with vat added and the claimed VAT refunds from bogus exports. He may have got a few hundred grand but HMRC like to add all the bogus vat involved and make good headlines ex-cop 300 million. But remember how his fraud worked they need to get HMRC to issue a refund cheque! - so if they cannot spot a fake invoice they pay!

Also no vat on phones and chips now so little chance of fraud in that area. The scammers have moved to other products.

Don't believe all the headlines!

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Can anyone explain how this story works?

When you make a sale you pay VAT to the HMRC, not claim it back. When you buy goods you can claim VAT back from what you paid.

So how did this scam work? BBC describes it as fake sales and claiming back the VAT on the sales. Doesn't make sense to me. The fake sales invoices would have attracted VAT payments to HMRC and not refunds.

You claim you bought some stuff and exported it outside the UK. That would get you a VAT refund if it was true.

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No Goat what he and his team dis was not carousel fraud, it was a variation on it. He printed bogus invoices from uk traders with vat added and the claimed VAT refunds from bogus exports. He may have got a few hundred grand but HMRC like to add all the bogus vat involved and make good headlines ex-cop 300 million. But remember how his fraud worked they need to get HMRC to issue a refund cheque! - so if they cannot spot a fake invoice they pay!

Also no vat on phones and chips now so little chance of fraud in that area. The scammers have moved to other products.

Don't believe all the headlines!

The charge was conspiracy to cheat the public revenue. That suggests they submitted a claim for a £300m refund, but it wasn't paid out, because HMRC checked the return, and prosecuted when they discovered it was false.

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The charge was conspiracy to cheat the public revenue. That suggests they submitted a claim for a £300m refund, but it wasn't paid out, because HMRC checked the return, and prosecuted when they discovered it was false.

Yes it was a conspiracy charge and he has gone to prison for his stupid crimes. But don't think for one minute he put in a 300M reclaim thinking it might get paid. HMRC will add all the VAT both input and output on fake invoices and from all the companies in the fake chains and round it up to a big number. Also look at the facts he set up a company from scratch without any sector experience and sold approx 2 billions of sales in about 9 months, HMRC were doing regular visits they did not spot anything wrong!. He sold approx 45 million worth of goods in the first few weeks before he even had a bank account, HMRC did not think that was odd! He sold phones that were not even made, HMRC told him that due to his high turnover he needed a better accounting system! All the invoices were fake, yet HMRC still made repayments to him without checking! He then disappeared off to Spain!

So how did they catch this master criminal?

You decide - was it either that fact he spent £1600 on dental work? or they stopped paying all phone and chip related repayments in a blanket policy and they spent the next two years looking at all repayments for reasons not to pay!

The facts are HMRC made it easy for VAT scammers to defraud the revenue and as a consequence genuine traders have been caught up in their blanket policies and all the time they a feeding the public sensational headlines! Next time you read another VAT fraudster story - look for fancy cars, a Rolex and a celebrity life style in the headlines

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