MTIC fraud stands for ‘Missing Trader Intra-Community’ fraud. It is the theft of Value Added Tax (VAT), which is achieved through the abuse of VAT rules on cross-border transactions between EU member states.
MTIC fraud is a serious offence that can carry a term of imprisonment. Given the severity of the situation, you need to speak to a fraud solicitor immediately if you are linked to MTIC fraud. Whether you have been accused of being the missing trader, or you have been unknowingly complicit in the fraudulent activity, we can help you. Contact us now. We offer free legal advice and can take your call 24 hours a day, 7 days a week.
MTIC fraud explained
Missing Trader Intra-Community fraud relies on the fact that trading between EU members is VAT-free, known more specifically as zero-rated.
In a non-fraudulent transaction, a business based in an EU country can sell goods to a company based in another EU country without charging VAT (so long as each has a valid EU VAT number). The company that is buying the goods then sells them on to customers in their own country. VAT is added to these sales at the domestic rate, and the company declares and pays VAT to their own national revenue authority. In the UK, this is HMRC.
MTIC fraud takes advantage of this intra-community trading deal. What happens is that a company buys products from an EU supplier. As mentioned above, this is VAT free. Then, the company sells the goods on to their customers, adding VAT to the sale price. So far, all is legal. However, the trader then disappears without declaring the VAT or paying a VAT bill. Instead, they have pocketed the money and become a ‘missing trader’.
Types of MTIC fraud
This is the basic model for MTIC fraud. The fraudulent activity is typically much more complicated than this, often involving numerous companies who may or may not be aware of the scheme.
One particularly complex form of MTIC fraud is carousel fraud. This is when goods or services revolve in and out of different EU member states. For example, imagine a UK business buys a product from France. This is zero-rated. The UK business then sells the product to another company in the UK and charges VAT. This trader then disappears without declaring the tax. This may happen several times, with the goods repeatedly being sold through different UK companies. Finally, the last company in the chain sells the goods back to a business based in France. The UK company can claim the reimbursement of VAT – even though VAT was never paid in the first place.
MTIC fraud can relate to both goods and services – some of which may not even exist. In the past, MTIC fraud schemes tended to focus on small but valuable commodities such as metals, mobile phones and IT services. Now criminal organisations have broadened their scope across different industries, including the energy and environmental sectors.
MTIC fraud and related criminal activity
MTIC fraud is an intricate form of fraud. As such, it is typically conducted by organised criminal groups. These individuals may also be involved in additional crimes, such as drug trafficking and money laundering.
HMRC and their European counterparts are particularly keen to crack down on MTIC-fraud. In fact, VAT fraud is one of the EU’s current priority crime areas. Investigations may involve the collaboration of different investigatory authorities. Because MTIC fraud is so often linked to additional crimes, anyone accused of MTIC fraud may face multiple charges.
What should you do? Fraud solicitors London
If you have been linked to MTIC fraud, you must speak to our fraud and financial crime solicitors straightaway. The authorities may accuse you of being the missing trader. Or, you may have been unwittingly caught up in the situation, completely unaware that you were facilitating a fraudulent scheme. Either way, we can help you.
We specialise in fraud and financial crimes and can represent you throughout proceedings. This begins with free police station representation. Thereafter, we can work to show that you were not connected to the fraud and that you could not have reasonably known that the transactions were fraudulent.
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Have you been accused of fraud? Contact our fraud and financial crime solicitors for a free initial enquiry.
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