VAT fraud rings up 12-year disqualification for phone supplier

A director of an Oxford wholesale mobile phone company has been banned from running a business for 12 years for his part in a ‘carousel’ VAT fraud scheme

William Howard was the director of the now liquidated Expeditors Ltd, which was set up in 2004 and wound up in June 2017 following a petition from HMRC regarding an unpaid VAT bill of £22,545.

The Insolvency Service then conducted an investigation, which focused on the mobile phone company’s participation in a form of VAT fraud known as missing trader intra community (MTIC) or ‘carousel’ fraud.

MITC fraud sees large consignments of high-value electrical or small items invoiced rapidly and repeatedly around trading chains. On paper the goods look like they are being moved repeatedly from customer to customer but the goods are only moved as they enter or exit the UK.

In the case of Expeditors Ltd, Howard used the scheme to offset VAT and reclaim close to £350,000 in its 2005 to 2006 VAT return.

The Insolvency Service says MITC was indicated by the rapid succession of same-day trades within the UK but goods were not delivered and remained on a shared freight forwarder, there were common uses of the same offshore bank, as well as payments being arranged with third parties who were neither suppliers nor customers.

Additionally, all the traders banked with the First Curacao International Bank which was shut down by the Netherlands Antilles authorities in September 2006 in order to prevent money laundering.

Anthony Hannon, official receiver in the public interest unit of the Insolvency Service, said: ‘This type of VAT fraud is very serious and a high priority for HMRC and the Insolvency Service.

‘MTIC fraud has caused loss to the public purse and has cost the tax payer substantial sums in fraudulent VAT claims. The Insolvency Service is committed to making directors accountable for their actions.’

Report by Pat Sweet

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