MTIC VAT Fraudster Ordered to Pay £13 million

A London man has been ordered to pay £13 million to HM Revenue and Customs (“HMRC”) or face a further 10 years in prison. Mr Sandeep Singh Dosanjh was the leader of a criminal gang who cheated the taxpayer out of £38 million through a series of bogus companies involved in carbon credit fraud, a form of Missing Trader Intra-Community Fraud (“MTIC”).

Carbon Credit: Missing Trader Intra-Community Fraud (MTIC)

The criminal gang made millions running a series of bogus companies trading fraudulently in EU which involved stealing VAT through a complex MTIC fraud over a period of six months from January 2009.

Emissions allowances or ‘carbon credits’ are issued by governments under various schemes designed to cut carbon emissions by businesses within the European Economic Area.  Most emissions allowances are taxed at standard-rate VAT in UK to UK transactions and VAT free when purchased from outside the UK by a UK based company.

The opportunity for MTIC fraud arises when standard-rated goods or services can effectively be traded VAT free between EU Member States and then sold on to another UK company.

In carbon trading, the fraudster could create a company and buy carbon credits on one of the carbon trading exchanges. The fraudster sells the carbon credit to another trader, or company, charges the counter-party VAT and disappears without paying VAT to HMRC. The buyer reclaims the VAT, leaving the taxpayer out of pocket.

Fighting Against MTIC Fraud

HMRC’s investigation found that the fraud was committed under various bogus companies importing carbon credits free of VAT into the UK.  The criminal gang then sold the credits on, charging VAT by bogus companies importing the carbon credits into the UK.  They then sold the credits on, charging VAT which was never paid to HMRC, and then dissolved the importing companies.

We understand that the credits were then sold on again between further companies before finally being sold on to legitimate companies. The VAT charged (believed to be in the region of hundreds of millions of pounds) by the “missing trader”  was then shared between the criminal gang.

Robert Alder, HMRC Criminal Investigations, said:

“This was a complex and lengthy financial investigation requiring enquires to be made with overseas authorities. This shows that HMRC is committed to not just bring criminals to justice, but also to ensure that we recover the money stolen from the taxpayer by criminals and return it to the Exchequer.”

MTIC fraud can be very complex involving a number of companies across the EU, however our expert tax solicitors and barristers can assist you in managing HMRC’s investigation by providing comprehensive legal advice.

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