Dáil Éireann - Volume 571 - 30 September, 2003

Written Answers. - Tax Fraud.

  164. Mr. Naughten asked the Minister for Finance if he has carried out a detailed assessment of the alleged VAT fraud on Irish-British trade reported to have affected over €8,000 million worth of trade; and if the opportunities for this have been thoroughly eradicated. [20873/03]

  195. Ms McManus asked the Minister for Finance the investigation which has been held by the Revenue Commissioners into allegations of an extensive VAT fraud involving the importation of electrical goods and re-export to the UK, which is believed to have significantly distorted Irish trade figures; if there was a loss to the Exchequer; if so, the estimated amount; if the Revenue Commissioners are co-operating with the British tax authorities in an investigation; and if he will make a statement on the matter. [20758/03]

  Minister for Finance (Mr. McCreevy): I propose to take Questions Nos. 164 and 195 together.

  I am advised by the Revenue Commissioners that the matter to which the Deputy is referring is known as VAT carousel fraud. This involves the consignment of high value, low volume goods, typically computer processing units, CPUs, or mobile phones, through a chain of companies in two or more member states of the EU for the sole purpose of defrauding the Revenue authorities of the VAT payable on the goods in the country of eventual destination. The commissioners are well aware of this type of fraudulent activity and have been actively tackling it in collaboration with the Revenue authorities of the other member states concerned. To this end, the commissioners established a dedicated VAT carousel fraud unit some years ago, with the specific remit of addressing the issues and assisting other Revenue authorities under the mutual assistance directives and regulations. Since 2000, over 35 investigations have been carried out mainly in collaboration with the UK Customs and Excise but also with other Revenue authorities. The Criminal Assets Bureau has also been actively involved in some of these investigations.

  As a result of effective information exchange and concerted enforcement activity by the various Revenue authorities in the EU, it is believed that the bulk of this type of trade in CPUs between this country and the UK has all but ceased. Inquiries to date indicate there has been no significant loss of VAT to the Irish Exchequer as the fraudulent activity has been targeted at other jurisdictions. However, because some of the trade has passed through Ireland, Revenue has adopted a very proactive approach to combating the frauds elsewhere. This is evidenced by the fact that the VAT carousel unit has identified suspicious trading activity indicative of carousel fraud and spontaneously alerted the relevant Revenue authority under the mutual assistance directives and regulations. This has contributed significantly to the detection of fraudulent entities and individuals in other jurisdictions, particularly the UK. Successful prosecutions for VAT evasion have taken place abroad and a number of persons involved in organising this trade have been convicted and jailed. The commissioners have been actively supporting these prosecutions in other jurisdictions. Some of these cases have yet to come before the courts. In addition, the assets of persons associated with this fraud have been targeted and, in this jurisdiction, the Criminal Assets Bureau has successfully pursued cases [145] and frozen assets where such assets were located in this jurisdiction.

  In relation to the impact of this trade on the trade statistics, I am advised by the Revenue Commissioners that they have been in direct consultation with the Central Statistics Office since February of this year regarding the trade figures resulting from VAT carousel movements between the United Kingdom and Ireland. As a result the CSO has issued an interpretative note in its monthly publication for general guidance.

  The Revenue Commissioners are satisfied that the actions taken to date in close co-operation with the other Revenue and law enforcement authorities have been successful in significantly reducing the amount of this trans-national fraudulent activity. The commissioners have assured me their VAT carousel unit will keep the situation under constant review.