UK Law dictates that a trader is entitled to offset input tax (purchases) against output tax (sales), and that where the input tax exceeds output tax, the difference can be reclaimed from the Revenue, something deemed to be a right of deduction.

However, certain traders exploit this system using Carousel or Missing Trader in Chain (MTIC) schemes to defraud other companies and HMRC from substantial revenues – estimates put the cost to the Revenue of between £3.5 and £4.74 billion each year.

Carousel or MTIC fraud is common through contrived chains involving highly intricate and plausible transactions. This often involves the supply of high value goods with a tax loss occurring when the VAT charged by the supplier is not paid to HMRC, but is claimed by the recipient.

Download: Fraud & Asset Recovery (PDF)