Published on 11 - September - 2009
Construction workers hit in £6m industry scam
Construction workers are being urged to contact their tax office to find out if they've been affected by a £6m construction fraud.
Customs officers making arrests and seizing property during raids
Twenty three workers have been arrested in dawn raids on 40 sites across Britain by HM Revenue & Customs officers, following nine months of investigation work into what is believed to be a scam known as "Missing trader fraud".
Thousands of construction workers may have been robbed as a result of the fraud, with organisations deducting tax and National Insurance payments from operatives but not passing them on to the HM Revenue and Customs.
The plot is believed to have been orchestrated by organised crime gangs in a bid to steal millions of pounds.
The fraud sees the creation of a contrived chain of companies, which claim to subcontract labour for the construction industry, with the sole intention of disappearing before paying the taxes due to the public purse and pocketing the money.
Construction workers who believed cash deducted for tax and National Insurance was being passed on to HMRC for the last six years, must now contact their tax office to find out if there is any shortfall in their tax and national insurance contributions. A shortfall could result in them receiving lower government pension payouts and could negatively affect other benefit claims.
In the UK, firms can apply for 'Gross Payment Status'. This means a contractor can make payments, for labour provided, to a subcontractor without accounting for the tax due on the money. The subcontractor then becomes liable to HMRC to pay the tax and the VAT element of the money they have received.
However, it is alleged the subcontractor contracts out the work to a second subcontractor, who never actually carries out the work and goes 'missing' with the tax that is owed. The first subcontractor then covers the transactions by false paperwork which is used to fabricate their tax records and their position for direct and indirect tax purposes.
Cash totalling £130,004 was seized during the HMRC raids along with paperwork including bank accounts, computers and Class A drugs.
The raids took place on September 9 in residential and business premises in the West Midlands, Staffordshire, Nottingham, London and Manchester.
"Today's arrests are the result of strenuous efforts by our teams of dedicated officers to disrupt the sophisticated scams of organised crime gangs behind money laundering activities", said Adrian Farley, assistant director of Criminal Investigation for HMRC. "This conspiracy by a number of contractors is believed to have resulted in the theft of over £6 million from the public purse, depriving vital public services of much needed investment. We are committed to bringing them to justice and to deprive them of the proceeds of their crime", he added.
The individuals arrested have been bailed until January 2010.
The arrests were made on suspicion of conspiracy to cheat the public revenue and money laundering offences under the Proceeds of Crime Act 2002.
HMRC investigations are ongoing.