FAR Consulting have teamed up with a leading national commercial law firm to offer what is considered to be a unique product within the UK.

Attracting recent headlines, VAT Carousel Fraud cost the Chancellor of the Exchequer over £1.9 billion of lost revenue in 2005. This type of fraud continues to grow to such an extent that it is distorting the UK's trade figures. This category of fraud is considered by HMRC to be particularly prevalent within the mobile phone/computer component sector.

As a result of this we understand that at least four of the major six banks have closed all accounts that they believe to be connected to mobile phone/computer component trading and are automatically declining all new business requests within the sector.

However, the product developed in conjunction with our legal partners has led to a number of our clients obtaining UK bank accounts through which to trade. Our specialist financial due diligence report, combining our in depth knowledge of this sector and the typical processes, profits and associated cash flows of traders and transactions, sets out:

  • a detailed flowchart for each type of transaction;
  • key historical accounting information, trend analysis, including customer and supplier analysis;
  • our assessment of the strength of both the transactional and financial controls in operation at the company; and, most importantly
  • whether or not, in our opinion, the processes and controls are typical of a business operating within this sector that is seeking to minimise its own exposure to risks inherent to the sector.

For more information on our specialist due diligence reports please feel free to contact us.

To date there have been numerous attempts by HMRC to refuse to pay input VAT to various businesses operating within this sector, most famously in the “Bond House” case, where HMRC’s arguments were rejected by the ECJ. More recently we understand that most, if not all, traders operating within this sector have once again had their input VAT repayments stopped, which were followed by a series of arrests during dawn raids.

A number of affected businesses are currently seeking a Judicial Review of HMRC’s latest action which is forcing several companies out of business or to make redundancies.

FAR Consulting has acted for a number of such companies in preparing a loss of profits report which assesses the financial impact on these companies as a result of this business interruption. Such losses are calculated on the premise that, in pursuing a claim for damages against HMRC, each company is entitled to be put into the position it would otherwise have been in if input VAT had not been withheld, and considers the impact upon the affected companies investments in subsidiary/ related companies.