11,500 Companies Struck off The Companies House Register is no Surprise to RAVAS...

Back in late 2022 RAVAS was approached by the BBC with details of 11,000 companies registered fraudulently at an address in Wales. RAVAS handed this information to the Public Accounts Committee.

The address being used by the 11,000 companies was that of a private individual who was completely unaware of the fact his address was being used, that is until thousands of envelopes containing VAT and duty bills turned up in the post. Eventually it became apparent that his address had been confused with another address in the same building. Even so there was no explanation as to why so many companies were registered in one location. All of them were involved in online retail and 2356 of them had debts of duty and VAT totalling over £600,000. The debts were for value mis-declarations of imported goods that were being sold online.

In March of 2023 the Chief Executive of HMRC, Jim Harra, wrote to the PAC after having been quizzed during a PAC session on the 11,000 Chinese Companies registered at the Welsh address. His letter stated "Our investigations so far have found no evidence of fraud or fraudulent intent". In July of 2024 the Chinese Accountancy Company involved in registering these companies at Companies House was voluntarily closed having only existed for two years. In November of 2024 bills for duty and VAT misdeclaration were still arriving at the Welsh address.

So what has been going on ? The answer is very simple. Since January 2021 when Postponed Import VAT accounting was introduced to all imports from China there has been an explosion in Import VAT and duty fraud. Thousands of Chinese Companies registered for VAT in the UK, have imported goods without having to pay import VAT and duty, mis-declared the value of those goods and have sold the goods online before disappearing into the ether, leaving a trail of VAT and duty debt. The complex structures used and the transfer of stock ownership from company to company is known as the Hydra Seller model.

The UK has been suffering an epidemic of Chinese Missing Trader Tax fraud that has been fuelled by lax controls, a de minimis of £135 that exempts goods from VAT and duty and a Postponed Import VAT scheme that allows Chinese traders to gain control of goods imported into the UK before VAT and duty has been paid.

The National Crime Agency has announced that 11,500 companies have been struck off the Companies House register. None of this is surprising indeed RAVAS expects to see more companies struck off. Until the mechanisms used by these fraudsters are tackled this fraud will continue .