More than pounds 10m is estimated to have been lost to the Treasury in a network of illegal gold transactions - involving 10 tons of the precious metal worth pounds 60m - between a complex series of 'front' companies.
On Thursday investigators arrested 25 people in raids on addresses in London, Sussex, Avon, the West Midlands and the Home Counties marking the culmination of the nine-month long Operation Erie II.
Several business premises were also searched and 36kg (79lbs) of gold seized from a car arriving by ferry at Dover. Another 5kg (11lbs) were found at Heathrow airport, taking the value of the seizures to pounds 300,000.
According to Customs, the gold was being brought into Britain from Belgium where it had been bought legally at the local rate of VAT of 1 per cent.
Once in Britain, it was usually then smelted down before being sold on to British gold dealers who would include in the price they paid for it VAT at 17.5 per cent - the UK rate.
However, this money did not find its way to the coffers of the Customs and Excise as it should have done. Instead it was laundered through a series of bogus transactions between false companies. Until the start of this year the gold had to be smuggled into Britain to avoid payment of VAT on entry into the country.
But with the advent of the European single market it has been possible to bring it across openly - prompting the fraudsters to massively step up the scale of their operations.
Customs officials paid tribute to the help they received from the Belgian federal police and the French customs service in breaking the fraud ring.Reuse content