VAT Missing Trader IntraCommunity MTIC fraud and Trade Statistics David Ruffles Office for National

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VAT Missing Trader Intra-Community (MTIC) fraud
and Trade Statistics David RufflesOffice for
National StatisticsLondon
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Simple MTIC fraud
1,000,000 - VAT Nil
(A) EU Supplier

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Simple MTIC fraud
1,000,000 - VAT Nil
(A) EU Supplier

Tax Loss - 157,500
900,000 VAT
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Simple MTIC fraud
1,000,000 - VAT Nil
(A) EU Supplier

Tax Loss - 157,500
900,000 VAT
920,000 VAT
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Simple MTIC fraud
1,000,000 - VAT Nil
(A) EU Supplier
(E) UK Broker
Tax Loss - 157,500
900,000 VAT
950,000 VAT
920,000 VAT
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Simple MTIC fraud
1,000,000 - VAT Nil
970,000 - VAT Nil
(A) EU Supplier
(E) UK Broker
Tax Loss - 157,500
900,000 VAT
950,000 VAT
920,000 VAT
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Impact on statistics

• 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

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The scale of the problem in UK

• billion of imports of goods
  services
• 1999 1.7 0.7
• 2000 2.8 1.0
• 2001 7.1 2.4
• 2002 11.5 3.8
• 2003 4.3 1.4
• With monthly profiles

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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

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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

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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)