1 VAT Missing Trader Intra-Community (MTIC) fraud and Trade Statistics David Ruffles Office for National Statistics London

2 Simple MTIC fraud (‘A’) EU Supplier £1,000,000 - VAT Nil (‘B’) UK Missing Trader

3 Simple MTIC fraud (‘A’) EU Supplier £1,000,000 - VAT Nil £1,000,000 - VAT Nil (‘B’) UK Missing Trader (‘C’) UK Buffer Trader £900,000 + VAT Tax Loss - £157,500

4 Simple MTIC fraud (‘A’) EU Supplier £1,000,000 - VAT Nil £1,000,000 - VAT Nil (‘B’) UK Missing Trader (‘C’) UK Buffer Trader £900,000 + VAT (‘D’) UK Buffer Trader £ 920,000 + VAT Tax Loss - £157,500

5 Simple MTIC fraud (‘A’) EU Supplier £1,000,000 - VAT Nil £1,000,000 - VAT Nil (‘B’) UK Missing Trader (‘C’) UK Buffer Trader £900,000 + VAT (‘D’) UK Buffer Trader £920,000 + VAT (‘E’) UK Broker £ 950,000 + VAT Tax Loss - £157,500

6 Simple MTIC fraud (‘A’) EU Supplier £1,000,000 - VAT Nil (‘B’) UK Missing Trader (‘C’) UK Buffer Trader £900,000 + VAT (‘D’) UK Buffer Trader £ 920,000 + VAT (‘E’) UK Broker £ 950,000 + VAT £970,000 - VAT Nil Tax Loss - £157,500

7 Effect on Intrastat data collection –Exports are captured; Imports are not Increasing imports worsens –Balance of Trade and Current Account Deficit ESA95/SNA say correct treatment is to increase imports –Affects Expenditure measure of GDP Estimates relate to carousel trade in mobile phones and computer components No estimate of carousel trade in other goods No estimate of acquisition fraud Impact on statistics

8 The scale of the problem in UK £ billion % of imports of goods & services –With monthly profiles

9 Quality of fraud adjustments Estimations include information uncovered by Customs operational activity They are corroborated by: - reduced EU trade asymmetries (UK trade data now more consistent with other countries’ data for their trade within UK) - smaller imbalances in the relevant products in the ONS annual supply and use analysis - smaller alignment adjustment in the quarterly national accounts

10 Current Work Project Board investigating the impact of MTIC on UK Trade Statistics Research alternative methodologies, and whether acquisition fraud could be estimated Investigating the quality of European Sales List (ESL) data

11 Future Work Continue to monitor MTIC activity Compare ESL information – – Arrivals, Other Member States ESL sales, VAT declarations – Dispatches, ESL sales, VAT declarations Investigate how best to incorporate the adjustments into the Overseas Trade Statistics (OTS)