My recent posting on Carousel Fraud and Climate Change was picked up by Devil’s Kitchen and led to a flurry of hits.

 

So now for dessert, the Blogosphere’s first CFRU: Carousel Fraud Round-up.

 

Remind us, how does it all work again?

 

Crooks set up an arrangement for buying and selling across EU borders physically small or even virtual high-volume goods (mobile telephones, computer chips, emissions credits) through a network of companies which may also be doing honest work (or not).

 

They put in their VAT claims paperwork describing these sales (which have not happened, even if the goods actually exist, which may not be the case), and the hapless VAT system pays out.

Net result?

 

Taxpayer’s money transferred from the state to crooks.

 

Is it such a big deal?

 

Well, it’s only taxpayers’ money. And it’s all so … technical, so media coverage of it lurks well away from the front pages. Or the numbers are buried in Hansard.

 

But the sums involved are vast beyond comprehension. And UK taxpayers are the suckers of choice.

 

Let’s say it’s running at a theft of £2bn a year. That’s some £3.5 million pounds a day, or £230,000 per hour.

 

The criminality is big enough to impact on UK and EU trade statistics. When media people hear politicians blandly praising the benefits of the UK’s EU membership in terms of the trade we enjoy with all our partners, why are they not demanding explanations of the impact of these frauds on that trade?

 

Just look at this:

 

The statistics make very unpleasant reading for both the Government and HM Revenue & Customs (HMRC), in that the period 2004/05 saw VAT losses from MTIC fraud estimated to have cost the taxpayer between UK£1.12 billion and UK£1.90 billion. According to figures from the Office of National Statistics, almost UK£10 billion-worth of export trade was associated with VAT fraud during the second quarter of 2006.

 

This represents a 50% rise on the first quarter of 2006. Indeed the scale of the problem is such that in the Budget 2006 the Government marked out MTIC fraud in particular as a contributor to the UK£0.7 billion fall in UK VAT receipts seen in 2005/06.

 

How can it be allowed to happen?

 

Because the complexity of modern government in the UK and across the EU allows simply conceived but bureaucratically complex rackets to flourish – the state is now too strong in petty bossiness and in emitting yet more complexity, hence too weak to deal with systemic threats on this scale.

 

Politicians are aware of the problem – some more than others.

 

But they look to be reluctant to profile the issue, as they fear they can do nothing about it. They risk looking weak, even though the scandal is astoundingly large. And the massive rewriting of the whole tax basis of the EU economy and associated treaties (and maybe even the whole logic of the EU itself?) falls into the Rather Too Difficult tray.

 

At the EU level some busy little governments are loath to take the hard steps needed to make a difference. Just think how awful it would be if we all lost our sense of proportion in dealing with these crimes.

 

Let’s be a bit fair on our officials. Identifying these possible frauds and then building a case to prosecute is really hard. The detail of the scams is so intricate and the sums of money being stolen so huge. The people involved can afford to employ armies of top lawyers and accountants to worm their way through even the most tightly drafted clauses and fend off even the fiercest official action. People have human rights you know! 

 

If the heat gets too hot, they just open up some new scams somewhere else in the system. And/or they bank on the fact that they have hidden their tracks among the activities of honest people.

 

And/or they appeal to the highest levels.

 

Some successful prosecutions have been won. But not on the scale needed to sort out the problem. Luckily there are always helpful lawyers on hand to help establish the truth.

 

An Appeal to the Blogosphere!

 

Our money paid into the tax pot in good faith is being plundered day in, day out. On a startling scale.

Since I started researching and writing this, another million pounds or so will have been stolen.

 

The incompetent government system led for over a decade by Labour loses colossal tax sums through these holes in its pockets, so brutalises taxpayers even further to make up the difference. The Mother of All Double Whammies.

 

Time for action! 

Let bloggers take up this issue right and left and centre, to get it mainstreamed.

 

Let the public press candidates at the forthcoming UK elections (yes, that means me too if I get selected to run in a seat) to explain what they personally will do to reduce these frauds if they are elected. And vote them down if they have never heard of the problem, or fail to show at least the hard-nosed purpose required.

 

Let’s urge our friends working in government to get in contact with the usual whistleblower networks, to get out there grisly detail on policy or operational failings. 

We have nothing to lose but our chains.