Carousel fraud might sound like fun and games but it is a big problem for the Government and one that they are actively clamping down on.
Needless to say, this has nothing to do with riding plastic horses at the funfair; this is a type of fraud that sees individuals or businesses make money through VAT claims. And, because of its prevalence, it is a type of fraud investigation that the forensic accountants at Frenkels Forensics are well versed in.
Without getting dragged too deeply into the intricacies of this kind of case – a carousel or missing trader fraud relates to the importing and exporting of goods, in which several businesses working together can steal large sums of VAT from HMRC. It involves goods moving between businesses, with the value steadily increasing until eventually the items are shipped on and the VAT, which has supposedly been paid each time the goods have been changing hands, is reclaimed. One or all of the businesses – the missing traders – then go missing and the Government is left out of pocket reimbursing VAT that was never actually paid.
Importantly, in this complicated crime loop, some of the parties can be entirely innocent. A business can pay VAT on a purchase and then sell it on without know that the buyers and/or sellers are planning to then export the goods and claim back on taxes that were never paid in the first place.
For these innocent parties, getting to the bottom of the criminal activity is vital, lest they become embroiled in something that they were ignorant of. As such, forensic accountants are often called in by defendants that are the subject of fraud investigations to prove that they were not privy to, or benefiting from, any such illegal behaviour.
For expert help in a fraud case contact Frenkels Forensics for an independent appraisal.
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By Vitek Frenkel – find me via Google+.