Inward and outward diversion fraud has cost Her Majesty’s Revenue & Customs (HMRC) millions in lost revenue and as a result, diversion fraud is prosecuted whenever possible depending on the circumstances.
Diversion fraud may relate to the import or export of prohibited products, as well as products such as wine, beer, spirits and cigarettes which avoid inward or outward excise duty.
Inward diversion fraud usually involves European Union (EU) imports which are re-directed to the UK market without duty being paid, as a result of false documentation.
In some cases, inward diversion fraud may involve the same products which have been exported to the EU using false documentation to avoid duty.
Diversion fraud may involve forgery if there is a counterfeit UK warehouse stamp on the Accompanying Administrative Document (ADD) or the haulier’s Convention Merchandises Routers (CMR) certificate, which is used as evidence that exported products have been delivered to an overseas warehouse.
Documentation showing the import and export of products may be forged to suggest goods are arriving and then leaving the UK; when, in fact, they have been diverted to other outlets in the UK for sale without duty having been paid to HMRC.
Diversion fraud prosecutions involve charges of fraudulently avoiding the payment of duty and are brought under the Customs & Excise Management Act 1979.
Investigations into diversion fraud at a business will be thorough and very intrusive, and can also involve related businesses and individuals, such as hauliers, both in the UK and overseas. It is vital to take expert legal advice if an investigation into diversion fraud has been launched, or there is a possibility that allegations of diversion fraud may be made or charges brought.
In the early stages of any investigation, it is easy to make errors and misjudgements which may prejudice the outcome of a case at a later stage or assume unfounded allegations of diversion fraud will eventually be resolved.
Allegations of diversion fraud damage business reputations and carry long custodial sentences and heavy financial penalties if a conviction is obtained.
In any investigation into diversion fraud, suspicion may fall on those innocent of any involvement, and taking legal advice is essential.
We at NBR can also advise on dealing with HMRC and can liaise with agencies involved in business fraud investigations, including:
City of London Police
Department for Business, Innovation and Skills (BIS)
Department of Trade and Industry (DTI)
Financial Conduct Authority (FCA)
HM Revenue and Customs (HMRC)
National Crime Agency (NCA)
Office of Fair Trading (OFT)
Serious Fraud Office (SFO)
Offences Related to Diversion Fraud
A charge of diversion fraud may include allegations of:
- Outward diversion fraud (or outward excise fraud)
- Inward diversion fraud (or inward excise fraud)
- Contravention of customs law
- VAT, Invoice and Payment Fraud
The maximum penalty for diversion fraud is up to 5 years in prison, however, exact punishments are calculated with regards to the value and nature of the items being shipped, and the sophistication of the alleged scheme involved.
Offences that are considered less serious may carry community service penalties or fines. It is difficult to know exactly what punishment you may be facing, so it’s important take immediate advice.
If you want to find out anything further about this topic then please feel free to call me on 01494 786000, 0207 240 2000 or 07961 116321. All conversations will be in strict confidence. You can also email me firstname.lastname@example.org.
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.