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  The purpose of this document is to update industry partners on activity undertaken by HMRC as part of the fight against oils fraud. It aims to provide as much relevant information and context as possible within the restrictions of legal requirements and duty of confidentiality.

Contents

CUSTOMS CONFIDENTIAL

Sanctions open to HMRC include:

It is understood that information will only be shared by either party where this does not compromise any legal restrictions, duty of confidentiality, security or operational effectiveness. Outside of these restrictions both parties will be as open as possible.

Specific restrictions include (but are not necessarily limited to):

    • Information about ongoing court cases

    • Information about named individuals

    • 28 day opportunity to come up with papers

    • Pre-empting official publication of new data

    • S17-23 CRC Act (which covers the use of information that HMRC has obtained)

    • Data protection

    • Limitations of data collection etc.

Information in the Public Domain

Some information regarding HMRC’s activities is published, and available in the public domain.

Examples of this are:

    • Press Releases – The press releases can be found under HMRC or under Northern Ireland. (http://www.gnn.gov.uk/)

    • Tribunal Hearings – The decisions of Hydrocarbon Oils tribunal hearings can be found at this website. (www.financeandtaxtribunals.gov.uk)

 
         
         
         
         

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Note that statistics provided in this report are indicative only and may not be a complete report. As such they are subject to change.

Laundering plants

4.1 In October, a fully operational fuel-laundering plant was dismantled by HM Revenue & Customs (HMRC) officers in a joint operation with the PSNI in an operation at Cookstown, County Tyrone.

The laundering plant was concealed in a farm outbuilding not far from a public road and rural housing. During this operation a large quantity of highly toxic waste that had been dumped near to the plant and adjacent to fields containing livestock was removed. In addition, two commercial vehicles were seized along with a forklift truck; storage tanks, fuel pumps and filtration equipment. It has been estimated that the potential output of the plant was 15,000 litres per week with a potential annual revenue loss of over £1/2 million. HMRC officers also seized 4000 litres of illicit fuel. A man was arrested and interviewed, a report is being submitted to the PPS.

In linked follow-up searches 1800 litres of illicit fuel, two cars and two flatbed lorries were seized at business premises in Cookstown, Co Tyrone, and a further 800 litres of illicit fuel were seized from another business in Beragh, Co Tyrone.

4.2 In January, a highly efficient and sophisticated mobile fuel-laundering plant was dismantled and 3,000 litres of illegal fuel seized by HM Revenue & Customs (HMRC) officers during a joint operation with PSNI in a rural area of Co Armagh. HMRC also removed six tonnes of highly toxic acid waste from the site. The estimated output of the plant was 150,000 litres per week with a potential annual revenue loss of £3.75 million.

A curtain-sided heavy goods vehicle adapted to carry a tank for transporting fuel, a fuel tanker, three metal storage tanks, and six other storage tanks containing toxic waste along with generators, pumps and filtration equipment were also seized.

A picture showing the level of sophistication and the scale of laundering plant disrupted (as described para 4.2).

An environmentally damaging aspect of the site where the laundering plant was located was the construction of a roadway to a nearby lake which bore evidence of contamination and the indiscriminate dumping of toxic waste (as shown in picture above).

4.3 A man was arrested after an illegal fuel laundering plant in Co Armagh was raided in February. HMRC officers, assisted by PSNI, visited a working farm in the Newtownhamilton area where they dismantled an acid fuel laundering plant uncovered in farm buildings. The illegal operation had the capacity to produce 140,000 litres of laundered fuel per week, with an estimated annual revenue loss of almost £4.4 million. They also recovered a generator, pumps, and storage equipment.

In addition 37 tonnes of toxic contaminated sludge, the hazardous chemical residue of the laundering process, were cleared from the site which had livestock and an inhabited farm dwelling nearby.

4.4 In March, HMRC officers, assisted by PSNI, visited a remote rural location in Co Armagh, where they dismantled an acid fuel laundering plant. The mobile plant was concealed in the back of a disused truck close to nearby houses. Pumps and storage equipment used in the illegal operation were also seized. The plant had the capacity to produce 70,000 litres of laundered fuel per week.

In addition, half a tonne of toxic contaminated sludge, the hazardous chemical residue of the laundering process, was cleared from the site. A nearby lake also bore signs of the indiscriminate dumping of this type of waste.

4.5 In April, a fully operational fuel-laundering plant near Nutts Corner in County Antrim was dismantled by HMRC officers in a joint operation with the Environment and Heritage Service (EHS). HMRC officers also seized over 13,000 litres of illicit fuel. Two people arrested at the site were interviewed and later released on bail pending further enquiries.

The filtration type laundering plant (as above) was hidden in a farm outbuilding not far from a public road and nearby residential property. Two vehicles were detained and a transit van seized along with a forklift truck; storage tanks, fuel pumps and filtration equipment. Eight tons of contaminated waste was also removed from the site. The estimated output of the plant was 20,000 litres per week with a potential annual revenue loss of almost £625,000.

There was evidence of significant seepage from the shed containing the laundering plant into a tributary of the Dundesert river and contaminating adjacent agricultural land. EHS officers are currently considering the best options for clean up that will prevent further damage especially to the main river.

Filling Stations

4.6 In September, a filling station that was selling illegal fuel was dismantled by HMRC, following an operation to target the sale of illegal fuel in Northern Ireland. In a joint operation with PSNI, HMRC officers seized over 4000 litres of illegal fuel, forecourt pumps and storage tanks at the retail outlet in the Newry area.

4.7 In October 2500 litres of diesel were seized from a service station in Lisburn. No delivery dockets were available, and the owner did not know anything other than the name of his supplier.

4.8 In October over 7500 litres of diesel was seized from a filling station in Co. Armagh, including from two concealed tanks. The paperwork was inconsistent and indicated considerably lower volumes delivered than were uplifted from the site.

4.9 HMRC officers were called to assist PSNI at a filling station in Belfast in October. 8000 litres of fuel plus tanks and pumps were seized. No paperwork was available and the owner did not come forward.

4.10 A filling station in Londonderry visited by HMRC officers in October was found to have a concealed storage tank and pump in a shed in addition to the visible ones in the yard. Having initially denied its presence, the owner then admitted to selling fuel for someone else. Under caution he revealed that he had been doing this for several months, that he believed the fuel was smuggled but did not know where it came from or his supplier’s real name. Nearly 3500 litres of diesel plus pumps and tanks were seized, and the case was referred to audit officers for further action.

4.11 Four vehicles with concealed tanks or fuel pods, some with false number plates, were seized from premises in Co. Down in November. The fuel in the vehicles and the residues in the tanks and pods all tested positive for euromarker and had high sulphur content, and was seized along with the vehicles.

4.12 During operations which started in November almost 10,000 litres of illegal fuel were detained at huckster sites in Belfast and counties Antrim and Armagh, with a combined capacity to supply 1.8 million litres of illegal fuel annually with a potential loss of revenue of £900,000. At a lorry park in Co Armagh three vehicles adapted to carry illegal fuel and a sludge tanker containing residue from laundered fuel were also seized.

4.13 In December nearly 2000 litres of fuel was seized from a premises in Belfast. Tests indicated that the diesel did not conform to UK specifications, and no paperwork at all was available, though proof of payment was subsequently provided.

Interceptions

4.14 In September, a joint HMRC and PSNI vehicle checkpoint was in operation in the Newry area and seven private vehicles were detected using illegal fuel with penalties of over £3,000 imposed on motorists for the return of their vehicles.

4.15 In October, HMRC officers accompanied by the PSNI seized 3 adapted vehicles and 7000 litres of laundered fuel from a yard in South Armagh.

4.16 A vehicle challenged by PSNI at Co. Down in November did not stop at the challenge. When it was eventually caught it was found to contain 2000 litres of kerosene in pods in the back. The driver ran off, but the vehicle and fuel were seized.

4.17 In November a box van adapted to carry fuel containers was stopped by police in Co. Tyrone. The fuel containers were found to contain over 3000 litres of diesel and laundered gas oil, which was seized by HMRC officers along with the van. The driver was arrested for motoring offences, and had apparently been offered £50 by someone he didn’t know to drive the van on this particular journey. A follow up visit to a site where PSNI officers had earlier seen the van led to the uplift of almost 5000 further litres of diesel and MGO.

4.18 9 tipper type trucks and nearly 16,000 litres of laundered fuel were seized from a commercial yard in Armagh. The vehicles were restored and the business subjected to a fuel audit.

4.19 An operation during November targeted at oils misuse by motorists carried out at locations all across Northern Ireland, 26 vehicles were detained and almost £11,000 in penalties imposed on owners for the return of their vehicles.

4.20 At an illegal distribution centre near Cookstown, HMRC officers, supporting PSNI, seized in November almost 240 litres of distilled poteen, 655 litres of illegal fuel, 4.6 kilograms of hand rolling tobacco and 11,000 cigarettes.

Criminal gangs

A Criminal Organisation is a number of people (more than 3) working together for a joint or common purpose. A disrupted gang is where the organisation is incapacitated or rendered ineffective and unable to continue it's activities within 12 months.

4.24 In October, HM Revenue & Customs (HMRC) officers arrested 11 people from addresses across the UK in a major operation targeting multi-million pound fraud. The arrests are linked to suspected oils fraud estimated to be in the region of £10 million. The organised criminal fraud involved the wholesale trading of hydrocarbon oils and associated money laundering. Three Northern Ireland men were arrested in the nationwide operation involving over 100 HMRC criminal investigators, supported by officers from several police forces. Search warrants were executed at business and domestic addresses in Londonderry, Armagh, North London, Cheshire and Essex.

4.25 In December, three men, including one from Northern Ireland, were been sent to prison for a total of 13.5 years at Coventry Crown Court, for their part in an illegal fuel-laundering scam, resulting in the evasion of over £2 million in excise duty and VAT.

A successful undercover operation by HM Revenue & Customs Officers (HMRC) showed how rebated oil (red diesel and kerosene) collected from a licensed distributor was laundered or mixed and then sold to the retail market as duty paid road diesel and ultra low sulphur diesel. The gang were also smuggling, laundering and mixing rebated oil (green diesel) from the Republic of Ireland. The fraud involved the laundering and distribution of over four million litres of fuel over an eight-month period.

In August 2004, 34,000 litres of kerosene were paid for in cash and collected in a number of fuel tankers driven by Brian O’Doherty on behalf of Taz Construction of Derby, a company whose details had been hijacked. The fuel was sold using a bogus company called Mac Oil based in Manchester, operated by others involved in the fraud.

During 2005, observations showed that after collecting the fuel O’Doherty drove to rural premises situated in the vicinity of Tong Forge near Telford, Shropshire, and to warehouse premises near Swadlincote, Derbyshire. O’Doherty was subsequently intercepted by Police on the M6 driving a tanker containing 25,000 litres of illicit fuel. Fuel was also seized from the tanker’s running tank.

In March 2005, HMRC officers executed a number of search warrants in the Midlands and arrested O’Doherty. A mixing plant was dismantled and quantities of kerosene and green diesel were seized at the Tong Forge site. At the Swadlincote warehouse a fully operating oils laundering plant was dismantled and in excess of 34,000 litres of finished product (DERV) was seized.

O’Doherty was charged with involvement in fuel laundering and excise fraud. Follow-up enquiries, which included searches and arrests, in Northern Ireland and Wolverhampton, established the involvement of organisers Damian Mulholland from Northern Ireland and Jagdevpal Singh in the fraud.

4.26 A confiscation hearing in Liverpool Crown Court ordered a convicted solicitor to pay £86,500, including costs. Brian Dougan from Armagh, had previously been jailed in July for his part in a £300,000 fraud.

Following a lengthy investigation into suspicious activity into the oils gang from across the UK, HM Revenue & Customs investigators examined the origin of large sums of money passing through Dougan business accounts on behalf of one of the gang leaders. An analysis of the financial records identified transactions totalling over £300,000 in 2001 and 2002 linked to property purchases in Northern Ireland. Dougan pleaded guilty to suspecting £66,500 he handled was money laundering on behalf of a convicted fuel fraudster on 22 May 2006.

On Tuesday 12 December, Dougan was issued with a confiscation order for the full £66,500 he handled plus court costs of £20,000 to be paid within 12 months or he faces another custodial sentence. Dougan had originally been sentenced to three months in jail for his part in the fraud on 24 July 2006 at Liverpool Crown Court.

Compliance

RDCO

4.27 Following non-compliance issues conditions have been imposed on four traders. One of these cases includes a settlement at Tribunal following an agreement to pay a VAT assessment of £500,000 in 2002.

4.28 A revocation on a fuel distributor for non-compliance issues was successfully defended at Tribunal in October.

4.29 A fuel distributor sought a Judicial Review on a recent revocation of his approval and the High Court directed an early Tribunal. A decision is expected in the next few months. This trader was also the subject of an extension to an Interim Receiving Order for £8.2 million to the Assets Recovery Agency in March 2007.

Post detection

4.30 An assessment over £109,000 was issued following the decanting of smuggled fuel from the Republic of Ireland, the case was a referral from PSNI who stopped a van for excessive speed. An assessment for over £114,000 was issued following the detection of laundered fuel in a haulage vehicle at a HMRC vehicle stop, further tests identified misuse in other vehicles and a storage tank. An assessment for over £46,000 was issued following the detection of a concealed split tank on a haulage vehicle.

VAT

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