MTIC or Carousel Fraud

MPR Solicitors have a wealth of experience of defending Missing Trader Intra-Community Fraud (MTIC) or carousel fraud cases.  We are specialists in the fields of corporate crime and fraud and have an in-depth knowledge of defending those accused of MTIC fraud.

To contact us regarding a charge of MTIC fraud, please call our office on 020 3824 8080 to make an appointment at our London office.

At MPR Solicitors we pride ourselves on providing a partner-led, quality, professional service.  If you have been accused of carousel fraud the consequences of a conviction can be catastrophic.  You can trust our team to provide expert advice and robust representation while supporting you and your family throughout the trial.

Our practice focuses on our core areas of law; therefore, clients who instruct us can be confident of our in-depth knowledge and experience in our areas of expertise. We are proficient, not only in domestic fraud defence but in acting for clients who have been accused of cross-jurisdictional offences.

If you have been accused of being part of an MTIC or carousel fraud, it is crucial that you take the allegations seriously and instruct quality, experienced fraud defence solicitors to advise and represent you. Our early involvement at the investigation stage will ensure that you receive the right advice at the police station during any interviews. We will work with you to avoid you being charged but where that is not possible we will work with you to prepare your case at trial. Our fraud lawyers will work with you to mount a positive and pro-active defence to any charges.

What is acquisition fraud?

The simplest type of MTIC fraud is acquisition fraud.  In this scenario, a trader imports goods VAT-free from the EU, the goods are then sold, charging VAT.  The VAT is never paid, and the trader ‘disappears’ taking the unpaid VAT with them.

What is carousel fraud?

Carousel fraud is highly technical, exploiting the freedom of movement of goods through the EU, where VAT is not paid when stock is moved between member states.  It involves people importing VAT-free goods, but rather than on-selling them in the domestic market, the goods are transferred through a series of companies (many of whom may be innocent buffers), each one liable for VAT.  The goods are then exported, possibly back to the original vendor.  They then start the “carousel” all over again, having claimed the VAT which should have gone to the government. The first link in the chain then goes missing without accounting for the VAT, and the final link in the chain reclaims the VAT it has paid before disappearing.

What is an example of carousel fraud?

A trader (trader 1) is based in the UK.  He buys from Spain a batch of computer chips for £1m.  He pays the Spanish manufacturer for the goods.  The stock is then shipped to a dock in the UK.  The shipment incurs no VAT.

Trader 1 now sells those computer chips to a conspirator (trader 2), for £1.1m.  He charges 17.5% VAT (at 9^th November 2017 the current standard VAT rate in the UK is 20%), and the conspirator sends £1,292,500 (being the price of the goods plus the tax) to the trader 1.

This accomplice (trader 2) then sells the computer chips to a third conspirator (trader 3) for £1.2m, charging VAT on that sale. Trader 3 pays £1,410,000 to trader 2.

This may continue for many conspirators (there have been cases where 600 companies have been involved in carousel fraud).  This example will deal with just three fraudulent traders.

Trader 3 now sells the chips to a Belgian organisation (which may be an innocent party).  No VAT is charged, and the sales price of £1.5m paid by the Belgium company without VAT.  At this point, the conspirators have made a legal profit of £500,000 on buying and selling computer chips.

In a legitimate sale and purchase, trader 1 would pay £192,500 to HMRC. Trader 2 has collected £210,000 in VAT but paid £192,500 in VAT and therefore has to pay only the difference (£17,500) to HMRC.  Trader 3 has charged no tax on its sale but has paid £210,000 in VAT and can therefore reclaim £210,000 from HMRC.

In carousel fraud, trader 1 vanishes without paying the VAT to HMRC.  When trader 3 (the final entity in the chain) collects £210,000 on the export, all of the organisations can vanish with £192,500 clear profit at the expense of HMRC.

All of the above can happen without the goods ever leaving the dock in the UK before being re-exported.  The same computer chips can be reused, going through the numerous buffers, each transiting around the 'carousel' bringing salvaged VAT to the fraudulent traders.

How we can assist if you have been charged with MTIC fraud

If you have been accused of being part of an MTIC fraud, it is crucial you get in touch with us immediately so that we can advise you on your best options.  Because MTIC fraud can be incredibly complicated, proving you were involved in committing a crime may be very difficult.  The prosecution has to show that an agreement existed between the parties to commit fraud.  Our fraud experts can examine your situation and build a strong defence, representing you robustly in court.

To contact our MTIC or carousel fraud solicitors in complete confidence, please call 020 3824 8080 or fill in our contact form to get in touch.