Criminal gangs use UK ports to defraud EU customs

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Goods can be transported all over the EU once they have passed UK customs

Systematic failures by UK customs officials have allowed criminal gangs to defraud the European Union of at least £2bn in just four years plus billions more in lost VAT, the EU anti-fraud office OLAF has claimed.

Olaf said failures by Customs as well as Excise had cost at least 5.2bn euros (£4.5bn) in lost duties as well as VAT.

The losses relate to clothing as well as footwear exported mainly coming from China.

An HMRC spokesman said its experts did not recognise OLAF’s estimates.

As a result This particular planned to challenge them, he added.

Ernesto Bianchi, investigations director for OLAF, said: “inside the last year we have seen a concentration of the fraud pattern as well as we have calculated of which roughly 79.9% of the losses in customs duties are made through declarations made in UK ports.

“These are estimates, of course, because the fraud can be perpetrated by a particular type of scheme where the companies actually disappear.”

The EU may order the UK to pay back the lost customs duties, estimated at about 2bn euros (£1.7bn).

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The EU’s anti fraud Bureau can be frustrated by the lack of action by HMRC

OLAF says almost 80% of the illicit traffic in goods passes into the single market through the UK, mainly the ports of Dover as well as Felixstowe.

Often shipments arriving in Hamburg will be transported to Dover so they can be declared for customs inside the UK.

The goods are then transported all over the EU once they have passed UK customs.

OLAF accuses HMRC of failing to use a risk analysis system used by various other European customs departments to detect fraud, despite This particular having raised the issue at four separate bilateral meetings with senior UK tax officials in recent years.

During a special Brussels-based operation in 2014, HMRC used the system to detect under-declaration of customs values totalling about £400m in just four weeks.

However, the UK was unable to recover the lost duties as well as has failed to adopt the methodology since then.

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Neven Juretic

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Clothes as well as shoes can be bought coming from wholesale retailers in China then exported to the UK

British businesspeople are concerned as well as say they believe criminal gangs operating inside the UK are also based in China. They also fear of which Chinese racketeers own as well as run many of the so-called fulfilment houses – the huge warehouses used to hold imported goods in Europe.

They are angry of which the same Chinese importers are evading VAT as well as under-declaring the value of goods at customs.

Richard Allen, coming from the business pressure group Retailers Against VAT Abuse (RAVAS), says his members had gathered plenty of hard evidence of widespread tax avoidance by Chinese criminal rackets.

“We were approached by a European police force who had impounded a large volume of goods coming from China as well as they told us of which the freight forwarder, as well as the warehouse of which was holding the goods inside the EU were involved as well as they were Chinese-owned.

“So This particular seems to be a very professional set-up. This particular seems to be of which they have found an Achilles’ heel in of which the UK can be a weak spot.

“Once you bring This particular stuff into the EU you can sell This particular to any member state as well as This particular will not go through any various other customs checks.”

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Operators who avoid paying VAT can undercut legitimate businesses

Many fear the current level of fraud actually detected can be just the tip of the iceberg.

Neven as well as Roni Juretic set up business selling tablet as well as smartphone covers online. In just seven years, their company has paid £750,000 in VAT.

By evading tax, they say the Chinese racketeers were able to undercut their business. A monthly turnover of £60,000 fell by more than two-thirds virtually overnight forcing the couple to sack staff as well as give up their own warehouse.

Mr Juretic says the business has recovered since then by specialising in higher quality items.

“This particular can be a complete as well as utter failure by HMRC to detect the fraud as well as to work out of which goods are being declared at a smaller percentage of true value when of which can be so obviously detected if they used the right methods,” he says.

“They’re also allowing VAT-evading sellers to warehouse stock inside the UK without taking any action against them, so add those two together as well as you’ve got a huge hole inside the UK economy.”

Richard Murphy, an accountant who has long campaigned against tax evasion, blamed the failures on cuts in HMRC staff following a big departmental merger in 2005.

“We saw a complete change inside the mentality of the organisation,” says Mr Murphy.

“They aren’t even training staff to be fully qualified tax inspectors any more. So the staff they’ve got are not as well trained as well as they’re being concentrated in fewer as well as fewer offices – many of which are away coming from ports.”

HMRC declined to answer the points made by Richard Murphy, the businesspeople as well as OLAF.

A spokesman said there would likely be no further comment while the OLAF figures were being challenged.

Andrew Hosken reports for BBC Radio 4’s the globe Tonight programme.

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