Thanks again Philippe 07:56 Nov 29, 2009
The recent National Audit Office report into HMRC 2005-06 accounts ,published last month, has a long final section devoted to MTIC fraud with a very clear explanation as to how the fraud is perpetrated. The report is well worth looking at and a simple example of the fraud contained in the report is quoted below:
1. An EU supplier from another Member State sells goods for £1,000,000 to a trader based in the UK free of VAT. Sales of goods between VAT registered companies in the EU are zero-rated for VAT
2. The trader sells the goods to another trader commonly known as the buffer at a reduced price of £900,000 plus £157,500 VAT. In order to avoid the price of the goods spiralling upwards each time the carousel turns, one business in the chain must sell at a loss. Following an intensive period of trading the initial UK trader goes missing without paying the VAT due to HMRC
3. The buffer accounts for VAT correctly and sells the goods to a trader at the end of the UK chain, termed the broker, for £950,000 plus £166,250 VAT
4. The broker makes a zero-rated VAT sale back to the original EU supplier for £970,000 and is entitled to reclaim the input VAT of £166,250 on the goods purchased | 
The translation workplace 
peer agreement (net): +1
