Tayside and Central Scotland

Dundee businessman guilty of multi-million pound VAT fraud

Shahid Ramzan
Image caption Shahid Ramzan was found guilty of VAT fraud worth £5,611,839 and of spiriting £20,610,213 out of the UK

A Dundee businessman has been found guilty of cheating the government out of millions of pounds in VAT.

Shahid Ramzan, from Broughty Ferry was found guilty of five charges, including evading, either alone or with others, VAT payments of £5,611,839 between October 2002 and July 2004.

The 40-year-old was also found guilty of transferring or hiding "criminal property" of £20,610,213.

Judge Lord Brailsford remanded Ramzan in custody.

Ramzan, 40, began trading from a bedroom at his home in Broughty Ferry, with only a telephone and a fax machine and a computer to access the internet.

Prosecutors claimed his international dealing was only a cover for his real business, exploiting loopholes in VAT regulations, along with others who were using Missing Trader Intra Community (MTIC) VAT fraud.

International transactions

Ramzan even set up front companies as a way of exporting his dirty money from Scotland.

The companies were legally Spanish, had addresses in Barcelona and Madrid on the stationery but operated from Dundee with bank accounts in Kilmarnock.

The verdicts ended court proceedings which began in late 2007, the result of Operation Slayer set up by what was previously Customs and Excise, now Her Majesty's Revenue and Customs.

On 1 October this year, the trial began at the High Court in Edinburgh with experts explaining how MTIC fraud worked.

The scam was to set up a chain of deals which was difficult to follow. An importer would buy goods without VAT because they came from another European Union country.

Chain of sales

When re-sold in the UK, the new customer would pay VAT but the importer would not hand it over to the authorities.

After passing from one so-called "buffer" company to another, a broker would finally export the same items, claiming a VAT refund. By then, the original "missing trader" would have disappeared, gone bust, or been revealed as a bogus company which had hijacked the VAT details of a genuine trader.

Customs and Excise would be out of pocket, with little or no chance of recovering the VAT to match the refund.

Ramzan's companies played the parts of "buffer" and "missing trader" at different times during his scams.

Mobile phones and computer parts were favourite items for dodgy traders, the trial heard.

Same stock sold

High value consignments took up little space and incurred lower carriage and storage costs.

Sometimes the same box of mobile phones might appear to change hands half a dozen times a day without moving from the same spot on the warehouse floor of a freight forwarder.

Ramzan had originally been accused of hiding close to £115m until defence QC Murray Macara successfully argued that only the VAT should appear in the charge and not the total turnover.

He is due to return to court for sentence, in Glasgow, next month.

David Odd, HMRC's assistant director of criminal investigation in Scotland, welcomed the conviction.

He said: "This was a complex and organised fraud making huge profits for Ramzan.

"He knew full well that he was breaking the law, yet chose to overlook it for the opportunity of making what he wrongly assumed would be easy money, at the expense of the UK taxpayer.

"He now has to pay a very high price for his criminal activities."

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