AN OXFORD mobile phone dealer has been banned from running a business for 12 years for his part in a VAT fraud scheme.

William Howard, 45, set up his mobile phone business Expeditors Limited in 2004 but it was wound up last year by HMRC following an unpaid tax bill of more than £22,500, according to the Government's Insolvency Service.

The service then conducted an investigation and found the company had committed Missing Trader Intra Community fraud (MTIC) - commonly known as 'carousel' fraud.

It involves large consignments of high-value electrical items invoiced rapidly and repeatedly around trading chains - the goods look like they are being moved from customer to customer but the goods are actually only moved as they enter or exit the UK.

The exporter can claim back from the government the whole of the VAT that should have been paid on the goods - as exports are zero-rated.

However, if there is a "missing trader" further back in the chain of sales, part of this VAT was never paid in the first place - and the Government loses out.

Mr Howard used the scheme to offset VAT and reclaim close to £350,000 for Expeditors Limited in its 2005 to 2006 VAT return.

The Insolvency Service added that all traders involved in the fraud banked with the First Curacao International Bank, which was shut down in September 2006 to prevent money laundering.

Anthony Hannon, from the public interest unit of the Insolvency Service, said: "This type of VAT fraud is very serious and a high priority for HMRC and the Insolvency Service.

"MTIC fraud has caused loss to the public purse and has cost the tax payer substantial sums in fraudulent VAT claims.

He added: "The Insolvency Service is committed to making directors accountable for their actions."