Dundee Headline (cmt1) December 16 2012' 012046PT

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Dundee businessman guilty of multi-million pound VAT fraud
VAT is Value added tax
A value added tax ( VAT ) is a form of consumption tax . From the
perspective of the buyer, it is a tax on the purchase price. From that
of the seller, it is a tax only on the value added to a product,
material, or service, from an accounting pointof view, by this stage
of its manufacture or distribution. The manufacturer remits to the
government the difference between these two amounts, and retains the
rest for themselves to offset the taxes they had previously paid on
the inputs.
The value added to a product by or with a business is the sale price
charged to its customer, minus the cost of materials and other taxable
inputs. A VAT is like a sales tax in that ultimately only the end
consumer is taxed. It differs from the sales tax in that, with the
latter, the tax is collected and remitted to the government only once,
at the point of purchase by the end consumer. With the VAT,
collections, remittances to the government, and credits for taxes
already paid occur each time a business in the supply chain purchases
products.
Shahid Ramzan was found guilty of VAT fraud worth £5,611,839 and of
spiriting £20,610,213 out of the UK
http://news.bbcimg.co.uk/media/images/64769000/jpg/_64769678_ramzanciarandonnelly.jpg
Jury told fraud accused was naive
Woman cleared of VAT scam charge
Trial hears details of VAT scam
A Dundee businessman has been found guilty of cheating the government
out of millions of pounds in VAT.
Shahid Ramzan, from Broughty Ferrywas found guilty of five charges,
including evading, either alone or with others, VAT payments of
£5,611,839 between October 2002 and July 2004.
The 40-year-old was also found guilty of transferring or
hiding"criminal property" of £20,610,213.
Judge Lord Brailsford remanded Ramzan in custody.
Ramzan, 40, began trading from a bedroom at his home in Broughty
Ferry, with only a telephone and a fax machine and a computer to
access the internet.
Prosecutors claimed his international dealing was only a cover for his
real business, exploiting loopholes in VAT regulations, along with
others who were using Missing Trader Intra Community (MTIC) VAT fraud.
International transactions
Ramzan even set up front companies as a way of exporting hisdirty
money from Scotland.
The companies were legally Spanish,had addresses in Barcelona and
Madrid on the stationery but operated from Dundee with bank accounts
in Kilmarnock.
The verdicts ended court proceedings which began in late 2007, the
result of Operation Slayer set up by what was previously Customs and
Excise, nowHer Majesty's Revenue and Customs.
On 1 October this year, the trial began at the High Court in Edinburgh
with experts explaining how MTIC fraud worked.
The scam was to set up a chain of deals which was difficult to follow.
An importer would buy goods without VAT because they came from another
European Union country.
Chain of sales
When re-sold in the UK, the new customer would pay VAT but the
importer would not hand it over to the authorities.
After passing from one so-called"buffer" company to another, a broker
would finally export the sameitems, claiming a VAT refund. By then,
the original "missing trader" would have disappeared, gone bust, or
been revealed as a bogus company which had hijacked the VAT details of
a genuine trader.
Customs and Excise would be out ofpocket, with little or no chance of
recovering the VAT to match the refund.
Ramzan's companies played the parts of "buffer" and "missing trader"
at different times during hisscams.
Mobile phones and computer parts were favourite items for dodgy
traders, the trial heard.
Same stock sold
High value consignments took up little space and incurred lower
carriage and storage costs.
Sometimes the same box of mobile phones might appear to change hands
half a dozen times a day without moving from the same spot on the
warehouse floor of a freight forwarder.
Ramzan had originally been accusedof hiding close to £115m until
defence QC Murray Macara successfully argued that only the VAT should
appear in the charge and not the total turnover.
He is due to return to court for sentence, in Glasgow, next month.
David Odd, HMRC's assistant director of criminal investigation in
Scotland, welcomed the conviction.
He said: "This was a complex and organised fraud making huge profitsfor Ramzan.
"He knew full well that he was breaking the law, yet chose to overlook
it for the opportunity of making what he wrongly assumed would be easy
money, at the expense of the UK taxpayer.
"He now has to pay a very high pricefor his criminal activities."


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