HISTORIC PRESS RELEASE : Healey hails success of VAT crackdown [November 2003]

The press release issued by HM Treasury on 25 November 2003.

Treasury Minister John Healey says the Government’s strategy to tackle VAT fraud has saved billions of pounds in revenue, as Customs today reported their latest success, arresting 12 fraudsters involved in a multi-million pound bullion and computer chip fraud.

Chairing an 11 Downing Street seminar with representatives from the mobile phone and computer chip industries and other stakeholders, Economic Secretary to the Treasury, John Healey MP, said Customs’ strategy to significantly reduce the losses from VAT Missing Trader Fraud was on track and was proving the value of the UK Government’s pioneering efforts to tackle the world-wide problem of tax fraud. Mr Healey said:

“VAT fraud is not a victimless crime. It lines the pockets of criminals, forces legitimate traders out of business, and robs the honest taxpayer of more than £2 billion a year. But we are showing we have the right strategies, the right skills and the right people to crack the crime gangs, and protect the revenue we need for our public services.”

“We were the first in the world to measure our VAT losses and bring forward a strategy to tackle them, and we are the first in Europe to address the problem by targeting action at the fraudsters not by imposing blanket regulation on every business. That is why the people I have spoken to today have applauded our efforts not criticized them.”

The fraud relies on bogus trade in high-value, low-volume consignments like  mobile phones and computer chips to steal huge amounts of tax in short spaces of time,  by not paying VAT over to Customs, and subsequently submitting  claims for VAT repayments. As well as describing the overall impact of Customs’ strategy, John Healey told the seminar about Customs’ success in cracking individual criminals and gangs.

In the latest such success, Customs reported 11 dawn searches of businesses and premises in London, Birmingham, Berkshire, Essex and, leading to the arrest of 12 people thought to have pocketed £25 million in a 25 day period last year by trading in computer chips and gold bullion on which VAT was never paid. Details of the investigation– codenamed Operation Devout – were released for the first time today.