Six men were charged by Kent Police earlier this week in connection with an alleged carbon credit fraud that is estimated to have cost the public revenue around £11 million.
Carbon credit VAT fraud dates back to the Kyoto Protocol, signed in 1997 in an attempt to encourage industrialised nations to reduce their Green House Gas (GHG) emissions. The protocol allows countries to meet their GHG obligations by buying reduction credits from other countries. In essence, it means that if a country cannot meet its GHG reduction target, it can buy credits from other countries that have credits to spare.
The VAT element came into play in July 2009, when the UK Government decided to make carbon emission trading 'zero rated' for VAT purposes. Differences in the way in which VAT is treated by different countries can be exploited, and, according to the Crown Prosection Service (CPS), this is what the recent charges relate to.
The CPS alleges that between 1st January and 31st July 2009, four of the six men used a missing trader intra-community (MTIC) style fraud to give the appearance of legitimate trading in carbon credits, allowing them to reclaim VAT paid out on purchases of credits along a chain of bogus companies.
Each of the four men is charged with one count of conspiracy to cheat the public revenue, contrary to section 1 of the Criminal Law Act 1977.
The four are also charged, along with two others, with money laundering offences.
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This blog post is intended as a news item only - no connection between Lewis Nedas and the parties concerned is intended or implied.