ANNEX 8: INTERCEPTION CASE STUDIES
Case 5
16.
Multi-trader intra-community [MTIC] fraud is estimated to cost the exchequer
approximately £750 million annually. The fraud typically comprises a scheme involving
a number of participants which is set up with the sole purpose of defrauding the public
purse. For example, an organised crime group acquires a VAT registration number in
the UK for the purposes of purchasing goods free from VAT in another EU member
state. The goods are imported into the UK and sold at a VAT inclusive price. The UK
company selling the goods will then “go missing” without paying the output tax due to
HMRC. The criminally obtained funds will be laundered through a complex network of
financial transactions involving bank transfers and cash movements in the UK and
overseas. In practice, MTIC fraud will involve complex layers of companies performing
different functions in an effort to conceal the fraud and to thwart investigation and
compliance activity.
17.
In one particular operation, supported by interception, a total of £3.2 billion in VAT
repayments was withheld from criminal groups fraudulently trading in mobile
telephones and computer chips. Interception was also critical in identifying the bank
of first choice for laundering the proceeds of the crimes. Working with international
partners, HMRC was able to prevent the distribution of assets to the criminal gangs.
The scale of the criminal conspiracy and related laundering operation is illustrated by
the fact that over $200 million of MTIC funds have been frozen and are the subject of
criminal and civil action.
18.
Since HMRC started using interception to support investigations into MTIC fraud, the
level of attempted fraud has reduced substantially from an estimated high of £5 billion
in 2005/2006 to an estimated current figure of £750 million.
336