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Evading Import Tax worth £2m

December 11 2012

The Old Bailey sentenced a garlic smuggler for six years after evading £2million duty, which is the longest sentence given for evading customs duty.

Murugasan Natrajan imported garlic into the UK from his business Perfect Imports & Exports in Southall, West London. However customs officers raided Mr Natrajan’s premises after noticing that he had suddenly stopped importing garlic and the importation of ginger had increased. After carrying out further investigations, HMRC  noticed that the temperature in containers that were used to import the ‘supposed’ ginger was perfect temperature for garlic and unsuitable for ginger.

After raiding Mr Natrajan’s premises, officers discovered over 100 containers were identified where there were strong belief that the contents had been either understated or wrongly described. In addition to seizing computer records from Mr Natrajan’s premises, officers also seized £150,000 in cash from Mr Natrajan’s home.

The reason why Mr Natrajan declared that ginger was imported instead of garlic was due to the fact that garlic attracts 9.6% duty whereas ginger does not. There is duty on garlic to provide protection for garlic growers in the EU. Ginger is rarely grown in the EU and therefore non-EU imports for ginger do not attract any duty.

Mr Natrajan was convicted in his absence after he failed to surrender to bail. HHJ Worsley described the scam as “sophisticated, persistent and prolonged” and went on to say that “these rules are designed to protect legitimate businesses from unfair competition”.

This case is a clear indication that HMRC are cracking down on Importers to ensure that they are making the correct declarations in the shipping records and that the correct duty is being paid on imported vegetables. Furthermore, in imposing a lengthy prison sentence, the courts have showed that they take duty evasion very seriously.

It should be noted that the duty on vegetables can be a complex minefield to get your head around. Even HMRC have on occasion incorrectly classified and imposed or failed to impose duty on vegetables, which includes wrongly classifying frozen garlic as tax-free in 2005 which led to a long running legal row with the European Commission.

Although it has been said before, it is clear that sufficient knowledge and experience is needed when dealing with duty on imported goods both within the EU and outside the EU.

 

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