Criminal gang ordered to pay back ill-gotten gains
A criminal gang that was found guilty of trying to steal £176m from the public purse were sentenced to jail in 2012. The complex scam known as carousel fraud involved the sale of expensive mobile phones which were imported VAT-free to the UK. The goods were then sold in the UK for an amount including VAT but the fraudulent business never paid the VAT due to HMRC.
The gang claimed to have sold more than 4m mobiles phones with a value of £1.7bn. HMRC investigators were suspicious when it appeared that the gang had sold 250,000 phones that had not yet been launched in the UK. When the VAT repayment claims submitted by companies linked to the conspiracy were reviewed, a total of £67 million of repayments was stopped by HMRC. However, three successful VAT repayment claims were made from November 2005 to June 2006, totalling over £100m before the fraud was stopped.
The leader of the criminal gang was sentenced to 17 years in jail with other members of the gang also receiving substantial sentences. One of the gang members fled the UK prior to the trial and is featured on HMRC’s “Most Wanted” list of tax fugitives.
Following confiscation orders being published earlier this month, four of the gang members have been ordered to repay £35 million or face more time in prison. For example, the gang leader has been ordered to repay over £30m immediately or face an additional 10 years in prison.
Robert Alder, Assistant Director, Criminal Investigation, HMRC, said:
‘This major investigation uncovered the severe abuse of our tax system by a ruthless criminal gang who made a huge profit from the fraud. They have already lost their freedom and now their illegal wealth will be taken away as well. These confiscation orders will rid these criminals of all their illicit gains so they can be reclaimed for public finances.’