Diversion Fraud Defence
If diversion fraud allegations have been made against you or your company, JMW can provide the specialist representation you need. We are experienced in helping people successfully defend against such serious and damaging accusations.
We have extensive knowledge of the law on diversion fraud and a track record of success in defending individuals accused of related offences.
To speak to a solicitor, get in touch with us by calling 0345 872 6666 or by filling in our online enquiry form.
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Diversion fraud is often referred to as outward or inward excise fraud, and it involves the illegal diversion of goods into the UK when they are destined for elsewhere. In some cases of diversion fraud, a number of people in the chain of goods are involved in the scam, but in others, people and businesses can inadvertently be drawn into fraudulent activity. We are able to assist in cases of both types of diversion fraud.
Outward Diversion Fraud
In cases of diversion fraud, goods supposed to be heading to UK warehouses for onward export into the European Union are unlawfully diverted into the UK market. This involves moving goods under duty suspension and this kind of fraud can involve any combination of:
- Warehouse operatives
- Hauliers
- Vendors
- Distributors
Fraud of this type always has one key aspect: the falsification of the Accompanying Administrative Document (AAD), which is sent alongside goods and guarantees the duty involved. As well as this, the consignment note - often referred to as the Convention Merchandises Routiers or CMR - is forged, and will fraudulently confirm that goods have reached their destination.
This may involve any of the following activities:
- Phantom exports, where goods are declared as exports on paper but never actually leave the UK.
- Reimportation of exported goods into the UK to exploit differences in duty rates or to benefit from duty suspension.
- Diversion of goods through a third country with lower or no excise duties, which are then smuggled back into the UK.
These operations can be complicated and unsuspecting traders may become entangled in them without knowing that there is fraud at play. Businesses should be extremely vigilant if they suspect that they are transporting or storing goods intended for use in fraud of this nature.
Inward Diversion Fraud
Inward diversion fraud is when duty-suspended goods are imported from a warehouse in the EU and are supposedly bound for a warehouse in the UK. If the consignment is checked en-route, the goods are only able to reach the warehouse if they are specified in documents in accordance with the AAD.
If this does not happen, the goods are diverted to the UK market even though the excise payment has not been made. A false warehouse stamp is then applied to the goods to make it appear as though they have been delivered in accordance with the law.
Goods in these cases may be:
- Misrepresented
- Hidden or otherwise smuggled
- Supplied with false documents
Recent changes in EU regulations and systems have made some types of inward diversion fraud more difficult. The introduction of new tariffs on goods crossing the UK/EU border has already changed the nature of inward diversion fraud. This has also heightened the risk that third-party businesses may be used to shield fraudulent activity from the authorities, without realising that they are involved in criminal activity.
For example, the EU-UK Trade and Cooperation Agreement includes stricter rules for identifying the origin of goods claiming preferential tariffs, which has made it more difficult to misrepresent where goods have come from to authorities.
Improvements in real-time tracking and reporting of excise goods movements in the EU's Excise Movement and Control System have also been designed to help authorities quickly identify and respond to suspicious activities. Advanced data analytics capabilities have been incorporated into the system to detect patterns indicative of diversion fraud.
As the UK's trading relationships with the wider world change following Brexit, there is a risk that fraudulent operations like these will move further afield to seek opportunities. You should monitor carefully for signs of forged paperwork that might be used to commit diversion fraud. If your business is suspected of involvement, you should speak to a solicitor at once.
Why Choose JMW?
We pride ourselves on our extensive experience and knowledge here at JMW. We have worked on many cases of both inward and outward diversion fraud, some involving very large numbers of defendants and witnesses and many involving months of court litigation.
Our serious diversion fraud solicitors in Manchester represent people from around the UK and will be able to offer advice both on where to go next and the best course of action to bring your case to a successful conclusion.
We will offer the support you need throughout your case, to allow you to get on with the important business of running your company.
FAQs about Diversion Fraud
- How can a solicitor help with cases of diversion fraud?
The penalties for any involvement in inward or outward diversion fraud can be severe, especially if authorities believe you are responsible for forged documentation. If you are placed under investigation, it is vital to instruct a solicitor at the earliest opportunity.
Several organisations in the UK are able to investigate fraud, including the National Crime Agency, the Serious Fraud Office, Trading Standards and local police forces. Each has different powers at its disposal, and they may work together on large-scale cases. Therefore, you should choose a solicitor with specific experience in diversion fraud investigations.
The team at JMW Solicitors can provide expert advice on the legal implications of any allegations against you in light of the specific excise and customs regulations that apply. We can help you to gather and review evidence that may be critical to your defence, including documentation, witness statements, and expert reports. If your business accounts are frozen during the course of an investigation, we can help you to have the relevant order varied or discharged, to afford you the funds to keep your business operating day-to-day.
At the investigation stage, your solicitor will assist you in preparing responses to inquiries from HM Revenue and Customs (HMRC) or other investigative bodies, ahead of any interviews you are asked to attend. Our aim in this is to make sure you comply with your legal obligations and give accurate responses, but do not inadvertently incriminate yourself.
In some cases, our solicitors can negotiate with HMRC or other relevant authorities on behalf of the client to potentially resolve the matter without going to court. If the case goes to court, we will represent our clients and present their defence as effectively as possible. Throughout the court process, we ensure that your rights are protected and that you receive a fair trial.
JMW's business crime solicitors can help to conduct a thorough compliance audit to demonstrate that our client has adhered to relevant regulations. If you are found guilty, we can present mitigating circumstances to limit any penalties and make sure that you are treated fairly. We will advise you if there is scope to appeal the decision or if other legal options are available to you. The team at JMW is committed to pursuing the best possible outcome for every client, no matter their circumstances.
- How can businesses be caught up in diversion fraud?
Any type of large-scale fraud involves many different moving parts. Often, unsuspecting organisations can be caught up in diversion fraud, and not realise that they are involved until an investigation begins.
Accidental involvement in diversion fraud most often occurs when businesses or individuals unintentionally engage in activities that result in the misdirection or misrepresentation of goods, and lead to unpaid duties. Alternatively, goods may be misrepresented to a third party by a supplier, and handled according to the incorrect regulations. Sometimes this is done with the intention of committing fraud, but at other times, suppliers or logistics providers may make errors that result in the misdirection of goods without the knowledge of the business.
Businesses can also commit diversion fraud entirely by mistake. For example, they might inadvertently violate excise regulations due to the complexity of customs and excise laws. Misunderstanding or misinterpreting these regulations can still lead to allegations of diversion fraud. If you are concerned about compliance, speak to a solicitor for legal advice tailored to your specific situation. Frequent changes in excise and customs laws can also lead to unintentional non-compliance, so it is important to stay up-to-date.
Simple administrative mistakes, such as incorrect or incomplete paperwork, can result in goods being diverted without the necessary excise duties being paid. Oversights in the logistics chain or in the storage or handling of goods, such as incorrect routing or mixing duty-paid and duty-suspended goods, can cause goods intended for duty suspension to be diverted improperly. Similarly, errors in labelling or classifying goods can lead to them being treated incorrectly under excise regulations and result in non-payment of duties. These situations can result in accusations of diversion fraud.
- How can businesses avoid being caught out by fraudsters?
There are several steps organisations can take to avoid fraud of this type. To begin with, they must implement strong internal controls and oversight, and give employees training on compliance with any excise rules that apply to the company's specific circumstances. Provide regular training if laws are changed or updated, and implement systems that will detect any issues as soon as they arise. Demonstrating good due diligence is often the strongest defence.
This means that business owners and directors must be responsible for keeping up-to-date with changes in excise and customs laws and reinforcing ongoing compliance. Working with a solicitor can help you to implement effective policies to this effect.
Make sure all documentation is clear, accurate and thorough whenever you move goods - whether across borders or within the same jurisdiction. This will not only help businesses to avoid committing diversion fraud accidentally, but also highlight any suspicious behaviour by suppliers or business partners that indicates potential involvement in this type of crime.
Talk to Us
If you have been accused of diversion fraud and require legal advice or representation, contact our team today. Call us on 0345 872 6666 or complete our online enquiry form and a member of the team will call you back.
