Nature Alert: Fraudsters target tax on carbon credits

Monday, 20 July 2009

Fraudsters target tax on carbon credits

Personal note: Here we go. The first of the predictable frauds to be discovered concerning carbon credits.

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After making billions of pounds from mobile phone and computer chip tax frauds, fraudsters have a new scam – climate change.

By Nick Huber
Published: 19 Jul 2009 The Daily Telegraph, UK

HM Revenue and Customs (HMRC) has recently uncovered what is thought to be the first attempted UK tax fraud in the carbon emissions trading market.

The tax dodge is a variation of the "carousel" VAT fraud. Carousel fraud, also known as "missing trader" fraud, has typically involved criminals importing goods such as mobile phones and computer chips VAT-free from European Union member states, selling the goods in the UK, including a VAT charge, and going missing without paying the VAT owed to the taxman.

In carbon trading, the fraudster could create a company and buy carbon credits on one of the carbon trading exchanges. The fraudster sells the carbon credit to another trader, or company, charges the counter-party VAT and disappears without paying VAT to HMRC. The buyer reclaims the VAT from the taxman, leaving HMRC out of pocket.

However, the taxman can require the innocent party to prove that it took reasonable care to check that it was dealing with a bona fide trading company, and withhold the VAT refund if not satisfied.

An HMRC spokesman declined to reveal the size of the recently attempted VAT fraud in carbon trading – a multi-billion pound global market and a key mechanism for reducing greenhouse gases.

He said that HMRC was monitoring the situation and discussing the potential fraud threat with other EU tax authorities and business.

He added: "We are considering our options for countering any fraud that emerges in the UK involving carbon credits and will continue to engage constructively in EU-level anti-fraud work.

"This can include taking criminal action such as we have done in relation to [carousel] cases. As such HMRC has a proven track record in investigating such cases and recovering money from fraud."

Under the EU Emissions Trading Scheme, the biggest carbon trading scheme of its kind, major polluters are given a carbon dioxide (CO₂) emissions allowance, and can buy or sell carbon credits.

The global carbon market was worth about $126bn (£77bn) in 2008, doubling in value from the previous year, according to the World Bank. But there are growing fears in Europe that fraudsters will undermine the emerging market.

Last month, the French Budget Ministry made carbon trading permits VAT exempt after rumours of an attempted fraud on BlueNext, an environmental trading exchange.

http://www.telegraph.co.uk/finance/5866178/Fraudsters-target-tax-on-carbon-credits.html

Hall of Shame for President Susilo Bambang Yudhoyono and the Palm Oil Industry.

Nothing can prepare one for the sight of the systematic extermination of orangutans by the government of Indonesia.

Look at the photos and news articles on these pages in the context of a statement the President made to the media on 10th December 2007.

“In the last 35 years about 50,000 orangutans are estimated to have been lost as their habitats shrank. If this continues, this majestic creature will likely face extinction by 2050,” President Susilo Bambang Yudhoyono said at the launch of an orangutan conservation plan at the climate talks in Bali.

“The fate of the orangutan is a subject that goes to the heart of sustainable forests … To save the orangutan we have to save the forest.”

Statements like these are most welcome, but unless backed up by action, such words fall on deaf ears within the Ministry of Forestry....who are busy granting licences to cut down the very forests the President says they should protect!

When you think you are to busy to help, please could you reflect for a moment on .........

The following extract refers to environmental problems in general. I just hope you find it as thought provoking and relevant to orangutans as I have.

"This is such a shocking and unpalatable fact that most people deny it, or they just don't want to think about it. They believe as individuals, they can do little about it, so push it to the back of their minds. But I can't do that.

When something has to be done, we need to do it. It doesn't matter how big the challenge is or how hard the solution; if I know something is wrong, and I am in a position to help, I will do my best to make it right." Duncan Bannatyne, successful British businessman.