Jesse Ducker (Bloomberg, 22 April 2014) suggests that HMRC is investigating large scale VAT frauds in the electricity markets. The UK power market is worth a cool £40 billion (annually) and HMRC suspects that energy market traders paying VAT to energy sellers are pocketing the money rather than paying it to the State. They have already interviewed traders from three trading firms (including two investment banks), apparently not as suspects.

There is nothing new about MTIC/VAT frauds; they were created as a result of EU legislation which exempts VAT on exports within the EU. The classic MTIC frauds for years centred on the mobile phone, computer chip and clothing industries.

It is strongly suspected by the authorities that MTIC (missing trader fraudsters) have now moved on to the carbon credit, wholesale telecom and power industries, and as a result large scale MTIC investigations have begun in the UK, Ireland, France and Germany.

Despite this crackdown it would seem that MTIC/VAT fraud is on the increase. The European Commission believes that €193 billion in VAT was lost in 2011 because of fraud, non-compliance and non-collection which represents 1.5% of GDP in Europe.

In response to this, the EU allowed member states to suspend VAT on industries that they believe are subject to fraud, thereby removing any tax monies to steal. As a result, the UK, Germany, France, Netherlands, Austria and Romania have announced proposed VAT exemptions on power trading.

Contact Lewis Nedas VAT Fraud Investigation Lawyers

If you are subject to a MTIC or any other VAT fraud investigation, please contact our experienced and specialist MTIC/VAT fraud lawyers, either on 0207 387 2032 or by completing our online enquiry form here.