Members of the British Metal Recycling Assn (BMRA) are being
targeted by fraudsters taking advantage of VAT loopholes when
trading secondary metals, according to director general of the
association Ian Hetherington.
Some BMRA members have become party to a trade or series of
trades involving more than one country that take advantage of
VAT rates, Hetherington told Metal Bulletin recently.
The BMRA has notified the Inland Revenue, Hetherington said.
"It will involve the import of material or certainly a trade
and the export of a trade or material," he said.
"The Inland Revenue term this 'missing person VAT fraud' as
[the traders] disappear having claimed VAT refunds and at the
other end they don't pay the VAT owed," he said.
It exploits the UK's 20% VAT rate and the 0% charged elsewhere,
"Our members are vulnerable to being innocent parties to this
type of transaction," he added. "Most of the time it is
inter-European trade and conducted either actually or
The UK is susceptible to this type of trade as it is yet to
adopt a reverse-charge VAT system for secondary metals, which
many other countries in Europe have adopted, Hetherington said.
Metal Bulletin has spoken to a merchant in Europe that has seen
such trades happen, particularly with copper scrap. However,
the BMRA said the evidence it has seen shows that various
metals are involved.
"From the way I see it, it has become an industry in itself,"
the merchant said. "This trade has been going on for three
years, shifting from country to country," he added, mentioning
previous instances of this type of trade in Germany and Poland.
Hetherington said that the trade of mobile phones is another
example where this "missing person VAT fraud" has occurred.
The UK government has since added a reverse-charged system for
this type of trade, he said, which has alleviated the problem.
"We would like to see [the government] introducing
reverse-charged VAT on all secondary metals," he said.
The BMRA has agreed to make any evidence it comes across
available to the Inland Revenue. However, Hetherington said it
was extremely hard to track the trades once the trade has taken