An HMRC study on the 2014-15 tax year estimates that there was a gap of £12.7 billion between the VAT theoretically due and the amount actually collected. Up to £1 billion of the missing money is thought to have been lost to so-called ‘missing trader’ fraud. This is an improvement on years gone by: a study on the 2005-06 tax year estimates the UK’s annual losses in tax revenue to missing trader fraud at £2-3 billion.
Not everyone involved in the fraud is a trader: legal professionals and corporate service providers are required to set up and administer the carousel, and profits are laundered in any number of ways. Anyone who counsels, aids or abets is liable for a money laundering offence under the Proceeds Of Crime Act 2002. In addition, under 5.4.3 Section 328 of the act, a person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person.
A recent case saw a solicitor convicted of suspecting the facilitation of something illegal when his clients turned out to be involved in a carousel fraud.