“Carousel” VAT fraud suspected in energy markets

Tax authorities in Europe have grappled for years with the problem of so-called “carousel fraud”. In this scam goods are traded across EU borders and VAT is charged but never paid – netting the fraudulent traders a steady 20% of the purchase price.

To work, the fraud requires lightweight goods that can be traded from country to country and in its early years it focused on physical goods, prompting tales of mobile phones and other lightweight, high-value goods in constant transit across the continent.

Electronic trading of weightless commodities make the scam even more profitable – and have made it possible to run it from a back room anywhere with internet access. The issue has plagued carbon trading for a decade, and arrests were made in the UK and elsewhere in Europe as far back as 2009.

Energy markets are equally vulnerable. Last year David Nisbet, a solicitor at Dundas & Wilson, discussed the implications for energy and carbon traders in an article for New Power.  Click below for his report

Carbon trading VAT fraud