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Carbon trading gang jailed over VAT fraud

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22nd Jun 2012
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A criminal gang who carried out a £38m VAT fraud in the carbon trading market through a chain of fraudulent trades has been jailed for a total of 35 years at Southwark Crown Court.

The case, thought to be first of its kind, comes after a three-year investigation by HM Revenue & Customs.

The gang set up a chain of bogus companies in order to trade fraudulently in European Union emissions allowances – known as carbon credits.

After the bogus companies imported the carbon credits free of VAT into the UK, they sold the credits on - charging VAT which was never paid to HMRC and then dissolved the importing companies.

The trades were made via a computer system. The stolen VAT was transferred to offshore bank accounts in the United Arab Emirates to “clean” the stolen cash which the gang spent on luxury cars and an expensive London home.

The credits were sold on again between three further “buffer” companies – also run by the gang – before finally being sold on to legitimate companies so the trading chain appeared legal.

The VAT charged by the “missing trader” was then shared out between the gang. The scam is a variation of the "carousel" VAT fraud, which has often involved imported goods such as mobile phones and computer chips

The gang stole around £38m through a complex missing trader fraud in a six-month period starting in January 2009. They were arrested by HMRC officers in dawn raids in August of the same year.

Chris Martin, of HMRC criminal investigations, said: “This was a deliberate attempt to steal as much money as possible from the public purse by a criminal gang interested only in lining their own pockets. HMRC will not stand by and let crooks rip off honest taxpayers. The message is clear – if you attempt to defraud the Exchequer, we will track you down and bring you to court.”
Confiscation proceedings are underway to ensure that the criminals do not profit from their crimes.

Sandeep Singh Dosanjh, from Gravesend, Kent was jailed for 15 years. Navdeep Singh Gillfrom South Langley, Bucks, was jailed for 11 years. Ranjot Singh Chahal from Southall Middlesex was jailed for nine years.

In July 2009, the Labour government introduced a zero VAT rate for emissions allowances to counter growing fraud in the carbon trading market.

In 2010, a “reverse charge” accounting mechanism was introduced. This means that it is the responsibility of the customer, rather than the supplier, to account to HMRC for VAT on supplies of the specified emission allowances.

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