Talk:Missing trader fraud

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A first attempt at this.

it's not a tricky fraud, but hard to describe. I've taken the basis for it from the case cited in the text, but I thibk it needs cleaning severely.

LeeG 01:29, 16 May 2006 (UTC)

I've rewritten it in a better way, I think, have added a redirect from carousel fraud. I don't know how to cite references, the main reference for this is the case cited in the article. Also put in US$ equivalents (based on 1.75USD to 1GBP. NOTE THE BILLION REFERRED TO WILL BE A UK BILLION, AS IN A MILLION MILLION. LeeG 19:10, 27 May 2006 (UTC)

No, it won't be a million million: the British government billion has been 1,000,000,000 since the 1960s. Morwen - Talk 11:35, 22 September 2006 (UTC)

References inserted at bottom of article. LeeG 21:25, 31 May 2006 (UTC)

[edit] One slight thing...

@Furthermore the same telephones can be used again and again going through the various buffers, each pass around the "carousel" bringing reclaimed VAT to the last buffer in the chain.:

Actually, although the amount of money being made through this scheme is equal to the amount of money reclaimed by the last buffer, this is not the place where the money is made. The last buffer has the same bottomline no matter whether it's part of this scheme or not. In fact the last buffer can be a legitimate business, and this has happened in the past. It got really nasty, because customs were onto the scheme and the business got its taxrefund denied and became insolvent (usually the profitmargin of such a business is very low compared to the total money throughput). However the business in question did not profit from any ongoing scheme.

The money is made by the first importer and the other buffers, who don't pay their taxes. Normally, the first importer would get paid 1292,500. From this 1000,000 goes to the French exporter, leaves 292,500. 192,500 goes to HM Treasury, leaves 100,000. Of course we couldn't sell our mobile phones at a higher price without adding value ourselves (otherwise the first legitimate company in the chain would be unlikely to cooperate, as it could get a better deal elsewhere). Say we lose 90,000 on glossy consumer-ready packaging or something. Our profit: 10,000, a tip where getting for being kind enough to do the administration of the whole affair.

Suppose we're part of the scheme, and instead of paying VAT, we do a runner. Our profit would then be 929,500 - 90,000 = 202,500. E presto, 192,500 created out of thin air.

Of course if the last buffer is illegit, and we've got a likewise illegit foreign company, we could conspire to not really add value at all (until we get ready to ditch the mobiles) and just send it through the carousel again and again, repeatedly charging VAT but not sending it to HM Treasury. Even in this scheme the money is not made at the last buffer, which may even be innocent still, as long as our conspirators manage to hide the fact from the last buffer that it's buying and selling the same mobile phones again and again. Shinobu 01:41, 17 July 2006 (UTC)

Good point, I have removed the specific reference to the last company LeeG 01:56, 18 July 2006 (UTC)

[edit] Stopgap?

The BBC says that current inter-EU-memberstate VAT-legislation was originally intended to be a stopgap, a transitional system until a permanent VAT-system was implemented, and that this stopgap is what makes this fraud possible.

The BBC also says that it's (among others) Britain that blocks a new system because it want's to keep control of its own VAT-tarifs, even though HM Treasury loses enormous amounts of money this way. Shinobu 01:16, 18 July 2006 (UTC)

You're right, the current common system for the taxation of the intra-Community ciculation of goods is a transitional one. It was in principle intended to cover the period from 1st January 1993 to 31 December 1996. But since the Member States have been unabable to reach an agrement on a defintive VAT system for the intra-Community exchanges of goods, the transitionnal systems is still in use and will probably remain in use for many years. --Lebob-BE 01:43, 28 November 2006 (UTC)