Court blows for Customs over VAT fraud

A £100m trial collapses, and another case ends in defeat. Paul Lashmar looks at a £20bn crime and the operations that backfired

Sunday 22 May 2005 00:00
Comments

The collapse of a £100m VAT fraud trial has left the Customs campaign against a £20bn crime wave in disarray. Seven men and one woman, originally arrested as part of "Operation Vitric", were released on Wednesday after the judge stopped proceedings at Blackfriars Crown Court in London.

The collapse of a £100m VAT fraud trial has left the Customs campaign against a £20bn crime wave in disarray. Seven men and one woman, originally arrested as part of "Operation Vitric", were released on Wednesday after the judge stopped proceedings at Blackfriars Crown Court in London.

Operation Vitric was a major campaign against an alleged huge VAT fraud involving the transportation of computer chips across European borders.

In a second related case, a businessman accused of masterminding Britain's biggest VAT fraud was found not guilty by a jury on Thursday. Dylan Creaven, 30, an Irishman, was arrested nearly three years ago as part of a Customs investigation known as "Operation Chipstick"'. He was initially accused of stealing up to £162m from UK taxpayers, although he was eventually prosecuted in relation to only £14m.

Customs has over 60 VAT fraud cases pending, involving hundreds of millions of pounds. VAT fraud, usually involving small, high-value items such ascomputer chips and mobile phones, has cost the British taxpayer tens of billions of pounds since the late 1990s.

In Operation Vitric, the main name on the Crown's indictment was that of businessman Neil David Lewis, 47. He had been arrested in Marbella and subsequently extradited. After 40 days of a pre-trial hearing, during which the defence presented evidence that not all relevant documentation had been disclosed by Customs, the judge found that the eight defendants could not have a fair trial.

The trial was one of the first prosecutions to proceed since Customs undertook a massive internal review to identify all relevant documentation related to VAT fraud trials and put an end to ongoing allegations by defence teams of non-disclosure.

However, despite the disclosure of thousands of pages of evidence before the beginning of the proceedings, more material continued to emerge. While praising Customs for its efforts to learn from earlier cases that have collapsed due to non-disclosure, the judge said that in this case the system had failed "to produce the degree of efficient, exhaustive disclosure that a case of this extreme complexity and massive scale demands".

The judge referred specifically to his embarrassment that further material had come to light after he had personally assured the defence that everything had been disclosed.

Claire Tyler of Bark & Co, who represented one of the defendants, said yesterday: "Rather than making defence lawyers scapegoats for spiralling legal costs, the Government should concentrate on getting its own house in order."

The extent to which the judge's decision will affect the 60-plus VAT prosecutions in the pipeline is as yet unclear.

The judge rejected defence allegations that Customs had in any way "encouraged" or "facilitated" the fraud, and had in any way given the defendants the "green light" to trade with known fraudulent traders.

A spokesperson for Customs said: "We will consider carefully the ruling in Vitric and the consequences of the verdict in Chipstick. We are confident that these prosecutions were properly brought, applying the code for crown prosecutors."

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in