HMRC Update – ‘Missing Trader’ VAT Fraudsters

VAT fraudsters receive lengthy bans

Two bosses who involved their companies in complex missing trader intracommunity (MTIC) fraud schemes using artificially extended trading schemes in attempts to reclaim millions of pounds of VAT fraudulently have received lengthy director bans.

Nadeem Ahmed, from Forest Gate, London, was a director of Face Off South Ltd (FoS), which was set up in 2004 and subsequently wound up in April 2015 following a petition by HMRC for £199,072 in unpaid VAT.

Investigations found that between June and December 2006, FoS exported £38m worth of mobile phones and computers. The company then filed quarterly returns with HMRC attempting to claim back VAT to which it was not entitled.

HMRC warned Ahmed about the risks of MTIC wholesaling of electronic goods and that he should conduct more robust checks on his trading partners, goods and commercial procedures. However, Ahmed ignored the general warnings and the varied MTIC trading hallmarks, as well as specific advice that FoS’s trades were traced to fraudulent losses.

Furthermore, despite the closure of FOS’s account with an offshore bank complicit with MTIC fraud, FoS continued to trade for another VAT quarter by setting up an account with an unregistered offshore bank. Fraudulent losses in its trading chains totalled up to £2.3m.

Following a trial in 2013, the court dismissed FoS’s appeal for reclaims and found that Ahmed knew the company’s trades were connected to fraud.

Now, considering Ahmed’s knowledge of FoS’s involvement with this fraud, the High Court has ordered that he is banned from running companies for 13 years.

In the second case, Ulhaque Ahtamad has been disqualified for 15 years, the maximum sanction possible. He was a director of Masstech Ltd, based in Gerrards Cross, Buckinghamshire, and traded in carbon emissions allowance and metals.

The company was set up in 1992 and wounded up in March 2013 following a petition presented by HMRC for £7,484,940 in respect of unpaid VAT.

Investigators found that Ulhaque Ahtamad made sales of more than £38m in the wholesale trade of carbon emission allowances and metals with little initial finance in place.

Masstech also entered into trading arrangements which were too good to be true and was repeatedly warned by HMRC, in particular against paying third parties who were not suppliers. This left no money along the supply chain to pay VAT to HMRC.

HMRC also reported Ahtamad was obstructive in his dealings with them, failing to advise them of Masstech’s carbon credit trades or change of address, as well as preventing visits and sight of company records. He also paid £7.38m to unconnected third parties, this topping the £7.1m of tax losses in Masstech’s supply chains.

Tony Hannon, Official Receiver for the Insolvency Service, said: “Both Ulhaque Ahtamad and Nadeem Ahmed involved their companies in complex VAT fraud schemes which attempted to cheat taxpayers out of millions of pounds.

“The serious nature of their misconduct has been reflected in the severity of their disqualifications and this should serve as a clear and strong warning to others that we will not hesitate to use enforcement powers to investigate and disqualify directors whose companies defraud the public purs