Opinion

Renewable energy the latest target for so called ‘carousel’ fraud

20th August 2019

Renewable energy the latest target for so called ‘carousel’ fraud

The recent government crackdown on the trading of renewable energy certificates is the latest measure to address so called ‘carousel’ fraud which drains billions from the UK economy each year.

“With environmental issues so prevalent it is perhaps no surprise that fraudsters have found a way to exploit the green agenda,” comments Julia Lowe, Head of Dispute Resolution at Higgs & Sons.

“Renewable energy certificates are big business and are the latest target of so called ‘carousel’ or Missing Trader Intra-community (MITC) fraudsters who are charging VAT on the sale of REGOs (Renewable Energy Guarantees of Origin), but not passing on those  payments to HMRC.”

REGOs show where electricity has been generated from renewable sources.  The certificates are typically issued by renewable energy developers to energy suppliers as a guarantee that the electricity has come from an appropriate source. They are also bought and sold by traders as a commodity, which according to HMRC, opens up an “opportunity for fraud”.

HMRC has acted swiftly to address this new fraud and the trading of renewable energy certificates will now be subject to a reverse charge, which means the buyer is liable to account for the VAT not the seller.

Julia continues: “MITC fraud has increased massively over recent years. It is estimated that it costs the EU around £133bn a year in lost VAT revenue.

“In the past carousel fraudsters have targeted mobile phones, precious metals and computer software and as the ‘green economy’ has grown over recent years, it is no surprise that it has now the target of fraudsters. 

“The issue is that businesses may unwittingly fall victim to MTIC fraud by innocently participating in a deal chain. Unfortunately they could still be deemed to be involved in the fraud and so will be jointly and severally liable for the tax loss.

“For businesses operating in the renewable energy field, or any other sector that may be susceptible to MTIC fraud, we can provide specialist support and advice to ensure that they are not unwittingly caught out.

“If you are concerned about possible MTIC fraud, or you have been contacted by HMRC in this regard you should get in touch with one of our specialist advisors immediately to seek advice and information as to what to do next.”

If you would like to discuss any of the issues raised in this article, please contact Julia Lowe

 

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