UK VAT investigation forces mobile channel freeze

Dubai implicated in major UK Customs investigation into VAT fraud carousels.

  • E-Mail
By  Michael Thorne Published  September 3, 2006

Mobile handset trade between the UK and the UAE has effectively been frozen as a result of a UK Customs investigation into suspected missing trader intra community (MTIC) fraud. “Handset trading with the UK is at a standstill,” an industry source told ECN. “Unsuspecting traders fear being caught up in illegal activity.” Cesar Gonzalez, account manager for handset trading website gsmexchange.com, attributed the slowdown to the UK authorities’ decision to freeze the assets of more than 70 UK-registered trading companies, many of which exported to markets including Dubai and Singapore. Figures recently released by the UK Office of National Statistics suggested that the value of VAT fraud exceeded US$19 billion in the second quarter of 2006. “Many UK-based handset traders have ceased exports, which has resulted in limited stock on the open market and a rise in prices,” said Gonzalez. “Many traders are uncertain about the future.” A UK Customs official confirmed that Dubai was one location through which MTIC fraud was being routed. “Locations outside the EU, including Dubai, began to feature increasingly last summer,” the official told ECN. “Data showed that trade with these countries was outstripping trade within the EU. “Most of the goods [are routed through] free trade zones in Dubai where the ability of the local authorities to monitor trade is constrained. Dubai has attracted a large ex-pat community including, we believe, those involved in MTIC fraud, who are drawn to the entrepreneurial nature of the business environment.” The official confirmed that UK Customs were working with UAE counterparts “on a federal and local level” to tackle the problem. “A mutual legal assistance treaty with the UAE is currently being negotiated and we hope to have it implemented before the end of the year. Also, we seconded a fiscal liaison officer to Dubai earlier this year who is working with Dubai Customs on this and other fraud matters.” Dubai Custom’s director of International Relations Abbas Makki confirmed his organisation was conducting its own investigation into the unusually high levels of trade between the UK and Dubai. “Our statistics department is investigating the matter in further detail,” he said.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code