Carousel fraud is expanding into the antiques trade. Steven Gallagher explains how
The EU estimates more money is lost to missing trader intra-community (MTIC) or carousel fraud each year than the £34.2bn spent on the Common Agricultural Policy (The Guardian, 17 March 2007).
Carousel fraud is most commonly effected using small, portable high value goods such as mobile telephones, and owes its existence to one of the core principles of the EU—the abolition of tax duties between member states, an objective of the Sixth Council Directive of 17 May 1977 (77/388/EEC), which acknowledged that member states should be able to take limited special measures derogating from the Directive to avoid fraud.
Ruffles and Williams (2005) identified two forms of MTIC or carousel fraud in the Report on Impact of MTIC on UK Trade Statistics:
- A trader in one member state supplies goods to another trader in a different member state. Such supplies are usually VAT-free. The second trader supplies the goods to a consumer charging VAT and should account for this. However, he disappears without paying any VAT.
- The more complex type is usually referred to as
