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MTIC – two worth commenting on


Missing Trader Inter-Community (MTIC) fraud cases are fairly common at Tribunal. Very few are worth noting as they find that the business making the appeal should have been aware of what they were getting involved with and therefore lose.

A little background. MTIC or carousel fraud is the buying and selling of usually high value goods (mobile phones, CPUs, etc.), often with very little margin (a key indicator). The last step in Great Britain is the zero-rated export (pre-Brexit dispatch) of the goods to the EU. They then re-enter Great Britain and start their cyclical (hence carousel) supply chain again. The fraud is that a GB to GB seller disappears before paying over the VAT on the sale but gives the next person in the chain (often colluding) an invoice entitling them to reclaim that VAT as input tax. New businesses are created to replace missing traders to then go missing themselves. 

HMRC addresses this by denying the input tax claims which often runs into millions of pounds.

Precedents have been established which the appellant must show that they did not know or did not have reason to suspect that they were part of a carousel fraud. Most fail. However, in this current case the appellant was able to convince the Tribunal which shows that it is possible to prove innocence.

The other MTIC issue to mention is the news that the latest trade to be used is that of Non-Fungible Tokens (NFTs); and that HMRC have been the first law enforcement agency in the UK to “seize” an NFT which can’t have been easy given that an NFT is a wholly digital certificate of ownership.

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