The Canada Revenue Agency (CRA) and HMRC in the UK have seen over 80 executed search warrants both in Canada and the UK just in the last week alone.
The CRA launched the investigation after discovering 11 foreign nationals living in the UK orchestrated a tax fraud scheme over a five year period over a five year period, who attempting to obtain CAD $52 million in false rebates for goods & services tax (GST).
The Canadian tax authorities say the fraudulent scheme involves B2B buying and selling goods or services to other businesses, with the GST being transferred from one company to another. The businesses then claim the GST refund and never remit the funds to the government. The process can repeat many times resulting in the goods moving around in the same way a carousel would, hence how the term was coined.
This type of fraud is unusual in Canada; however cases in the UK are on the rise. The CRA’s statement suggests close future collaboration between the two countries, by using intelligence gathered through information sharing and collaboration.