MTIC and carousel fraud

To discuss your requirements please contact Jeremy Scott on 07971520407

If you are accused of defrauding HMRC as part of an MTIC or carousel scheme, it is likely that a specialised team will seek to exact the most severe punishment possible. The losses suffered by the UK Government as a consequence of tax fraud run to billions of pounds, and the ability and appetite on the part of HMRC to pursue such charges has never been higher. The specialist teams dedicated to investigating these schemes result in above average conviction rates, which is why, if you do receive notice of an MTIC or Carousel Fraud investigation, you should contact an expert immediately.

MTIC or Carousel Fraud investigations are almost always highly complex and document-heavy, involving multiple high-paced transactions, large sums of money, and numerous parties, some of whom will have intentionally committed fraud (and be difficult or impossible to trace), while some may have been innocently drawn into the scheme. Our complex fraud defence team has over 40 years’ experience standing at the side of those facing such accusations and has a proud track record of achieving the best possible outcome.

MTIC (Missing Trader Intra-Community) frauds, and their more complex variant carousel frauds, involve avoiding VAT payments on goods moving between EU member states. Investigations can be civil or criminal, and the penalties on conviction can be severe, including imprisonment. In such matters, it is vital to get the advice of a team which knows how to win.

Quite simply, we win cases other firms would lose. In over 4 decades of defending clients from charges of tax fraud, we have developed enviable knowledge and expertise in this highly complex area. Not only that, we also understand how HMRC and other national tax authorities operate, meaning that we are able to strategically plan your defence pro-actively and dynamically.

Our international contacts and experience mean that we can seamlessly lead multi-jurisdictional operations. We are available to our clients 24/7, reflecting the nature of HMRC investigations, and the fact that you will often receive little or no warning of their action. Time is of the essence in these matters, and we are ready to act immediately.

We are proud of our reputation as tenacious, practical, and dynamic advisors. Our expertise in this area has been recognised in the Legal 500, which ranks us for Regulatory Crime, and accredited by the Law Society (we are part of the Criminal Litigation Accreditation Scheme) and through our membership of the SRA specialist Solicitor Higher Court Advocate panel.

In complex cases such as MTIC or Carousel Fraud, you need experts by your side. We will provide the technical legal advice you need in plain, jargon-free language. There are no prizes for second place in these matters, so make sure that you have a team which understands what it takes to win. We will work tirelessly to ensure the very best outcome, whatever the circumstances or your level of involvement.

The most straightforward form of Missing Trader Intra-Community fraud involves a seller buying VAT free, zero-rated goods in the EU and importing them into the UK. When such goods are sold in the UK, the seller is responsible for collecting and paying VAT to HMRC. However, in a MTIC fraud, the seller goes “missing” without paying over the VAT.

Classic MTIC frauds involved small, high-value, easily traded items such as microchips and mobile phones, but jewellery and other marketable high-value goods have also been used. 

Carousel fraud is a more complex version of MTIC fraud, involving multiple, sometimes continuous transactions. In a carousel fraud, the original seller purchases goods from elsewhere in the EU and imports them to the UK, where VAT is charged on sale. As in a MTIC scheme, the seller goes “missing” without paying over the VAT to HMRC. The goods are then sold on, VAT inclusive. Depending on the nature of the scheme, and the extent to which all parties are aware of the fraud, some or all the VAT is paid over to HMRC at this stage. The goods can be bought and sold numerous times before a broker exports the goods to an EU customer, in a zero-rated VAT transaction. The broker is then able to reclaim the VAT paid on the goods from HMRC.

Once the goods have been exported from the UK to the EU, the carousel can turn again, with the good being re-imported and the fraud committed again.

A further variant of MTIC fraud, again designed to take advantage of VAT free trading rules, is contra-trading, where two chains of transactions import and export goods from the UK to EU member states.

VAT Diversion Fraud is another method used to avoid payment of required duties, in this case on alcohol. The UK has some of the highest alcohol duty rates in the world, so avoiding making the necessary payments is lucrative. These schemes involve illegally bringing alcohol, which was due to be exported to an EU country, into the UK and failing to make the legally required duty payment.

A similar fraud, known as a drawback fraud, involves exporting alcohol to an EU member state, paying the lower duty there and then bringing it back into the UK.

These types of complex frauds are often committed by organised crime groups to fund their illegal activities. False names and bogus companies are employed to hide the identity of the perpetrators and make it more difficult for HMRC to investigate.

However, it is not only criminal gangs who can get embroiled in these schemes. All types of businesses and individuals, especially those involved in importing or exporting goods, can become involved, as well as completely innocent businesses selling imported goods in the UK. The nature of the schemes means that the importer of the goods goes “missing”, leaving parties with no knowledge of the fraud to face HMRC investigations, accusations, and tax recovery claims.

The high-value nature of the goods typically involved in MTIC frauds, and the high-speed nature of the transactions once the goods are in the UK market, means that these schemes cost HMRC huge sums. As such, the authorities are committed to prosecuting and to inflicting the most severe penalties possible on those found guilty.

All unpaid taxes will need to be repaid, but prison sentences are also common in these cases. For those individuals found to have played central roles in organising MTIC or carousel frauds, decades in prison can be handed down.

Just as MTIC and Carousel Frauds evolve and become more sophisticated to avoid detection, the authorities have developed more robust methods of investigating and prosecuting those involved. High-speed, high-value, complex transactions will often attract early intervention from HMRC, with investigations being launched with little concrete evidence of fraudulent activity.

The first you may know of the existence of any fraudulent scheme may be an arrest, which could well take place at your home, at night. In such circumstances, getting immediate expert advice is vital, as any information which is disclosed, even at this initial stage, can be used as evidence in court. You could also find yourself subject to disclosure orders and/or restraints on your ability to trade or travel with little or no notice.

Our expert team is available 24 hours a day, 7 days a week to support our clients whenever they need us. We will be by your side, leading your defence, and working to ensure that, if a penalty cannot be avoided, the consequences for you and your business are minimised.

Lupton Fawcett’s team of Business and Financial Crime Solicitors are highly regarded for successfully defending businesses and individuals facing investigation or prosecution for all types of fraud offences.

If you are facing an investigation for VAT fraud through a MTIC or carousel trading scheme we can provide comprehensive support, specialist legal advice, and skilful representation.

Our team is led by Jeremy Scott who has 25 years’ experience of defending clients across the full spectrum of corporate and financial crime cases so you can rest assured that whatever the circumstance are, we’ll be able to help find the optimal outcome.

At such a critical time for the reputation and future of you and your business, it is imperative that you choose the right lawyers to advise and represent you. Lupton Fawcett, ranked in The Legal 500 for Regulatory Law, is known for winning cases that other firms would lose.

Part of a nationally recognised full-service law firm, we are able to assemble a multi-disciplinary team to support you through a criminal regulatory investigation or prosecution with the utmost care.

We also understand that business has to continue as, so our approach is always highly commercial, putting business continuity at the heart of our advice and representation whenever possible.

Within every area of law, we put your interests first.

Our MTIC and Carousel Fraud Solicitors act regularly for corporate clients across England and Wales including Bradford, Birmingham, Hull, Leeds, Liverpool, London, Manchester, Sheffield, York, and Nottingham.

We can support your needs wherever you live in England or Wales

We will always respond promptly, and we will be happy to help.