Our regular interviewer Una Riley catches up again with Roy Clark.
It was a crisp day with the sun shining until the rain started to spit, in that irksome manner. I was cold and now getting slowly wet as I stood by the Thames outside the building of HM Customs and Revenue; the prospect of walking into the tax office of all tax offices did not inspire enthusiasm!
However, once inside and greeted with a welcoming smile I soon felt comfortable. I was then escorted to the office of Roy Clark, Director of Criminal Investigations – Law Enforcement and Compliance at HMCR (HM Customs and Revenue). The room was more akin to a Georgian sitting room with its high ceilings and a feel of space and elegance. The last time I met Roy was when he had been appointed as Director of the Crimestoppers Trust (May 2002). Since then he has been Director of Investigations for the Independent Police Complaints Commission (IPCC) which was set up under the Police Reform Act 2002 and was introduced to replace the Police Complaints Authority. The concept in April 2004 was a new system for handling complaints against the police.
The organisation has its own powers of investigation and its own teams, able to carry out investigations independently of the police. The IPPC also has a guardianship role to ensure that the system of complaints against the police works fairly and effectively in order to make certain that the public has confidence in the system. However, I was there to talk about Roy’s latest role. Before long we were chatting about the various ways that fraud is committed and the huge amounts of money that not only we (the UK) lose out on from the loss of tax revenue, but also the day to day effect it has on the consumer through increased costs. We spoke about VAT frauds, not just the domestic frauds but international frauds.
I asked Roy to explain. "There are two systems, the VAT system is designed to be non bureaucratic and easy to operate so that trade, industry and commerce does not slow down. There is also the tax credit system, (which replaced child benefit). It is designed so that people are not in need and of course the reality is that for 95 per cent of people it is working fine and we shouldn’t make the system difficult for them. However, the problem is that from within my area of the woods, organised crime has seen the vulnerability and are coming and stealing it. A good example of this is that there was a case recently whereby people got hold of the personnel data of the Department of Pensions, somebody leaked or stole the disc which contained names, addresses, dates of birth and national insurance numbers of all the people that worked for the department.
"Having got that, the criminal gangs spent some time establishing bank accounts through the internet, which is an all too simple process. Over a period of time they opened thousands of bank accounts and then they used the stolen data and made multiple claims on the tax credit system and sucked into those bank accounts many millions of pounds. They were just on the point of sucking it out into another account, probably abroad, when the fraud was recognised and closed down but the take on that was several million pounds."
Your experiences in the other roles in your life have obviously prepared you for this job? I suggested. Roy nodded and went on: "I served on the Regional Crime Squad for many years, working very closely with and crossing over with what was Customs and Excise, particularly the Class A Drug Squad. Since leaving the police force I have kept up some associations with Customs and was aware that there was a major change coming because SOCA, the Serious Organised Crime Agency was being formed and was taking Class A Drugs into a different environment.
"That actually meant that the challenge of where I am now within Her Majesty’s Revenue Customs was to bring together two very different groups of investigators, those from the former Inland Revenue and those from the former Customs & Excise to mould them into one organisation. So what we have been dealing with in recent months here is a de-merger, moving 800 of the investigators from this directorate to SOCA where they will form part of the backbone of the new SOCA establishment. This will leave me with about 1500 to 1600 partly Revenue and partly Customs investigators who will face the new responsibility of being the ‘Fiscal Warriors’. They are very much focused on crime committed against the tax system.
"Up until now they have co-habited but what we are about to do is to get them married so they are wed to common training, common practice and common power. They have very different powers at the moment and concentrate on two forms of crime. Firstly the people who do not pay the personal taxes that they should – but of course we are only dealing with the top end. A good example of this is a guy who recently got 12 years in prison for defrauding the Exchequer of personal tax of around £100m over several years and has to pay back the money. That is personal tax, but there is also organised crime attacking the VAT system. For example organised crime bringing in cigarettes to undermine the legitimate market and organised crime taking the red dye out of agricultural diesel and selling it as legitimate diesel. There is also the spirit market which is another area used to extract money, but I think the worst of the two, if there is a worst of crime, is the evading of tax, not allowing money to get into the tax system which should get in. The attack from organised crime is particularly relevant now in the area of fraud which we call ‘Carousel’ fraud.
"This is exploiting the fact that no VAT is payable between EU countries so they import a high value commodity and put it through a system of companies in this country, some of which are completely fictitious, and then re-export it back to an EU country and at that point they reclaim the VAT they haven’t paid. That is costing this country probably some where in excess of £2bn a year. So these are real serious attacks from organised crime. I think that is what made this job particularly interesting. I have looked at some of the intelligence reports and seen names that in my police career I saw doing armed robbery two or three decades ago, dealing with high level importation of drugs a decade or so ago and now those same names, those same organised crime gangs, are the controlling minds behind these really serious attacks on the fiscal system. I think the important thing is to recognise that crime goes where the opportunity is and I see the new opportunity is stealing pound notes again, only this time they are not using sawn off shot guns and it is not attacking cash in transit. This time it’s highly intelligent, highly complex, international trade and the product is money out of the tax system. I think people should sit up and realise that these aren’t victimless crimes. What it actually means is that you and I and everybody else that goes out to work and pays their taxes monthly is a victim of these criminal offences. We are having money that we have invested in a civilised and better country stolen from us and whisked off out of the country to areas where they know they can launder it with relative ease and spend it."
Is this crime indigenous to this country? I asked. He said: "I think part of the problem is with the advent of the web-based opportunity it means that you can be anywhere in the world and perpetrate a fraud. You can open a bank account remotely using a website from a foreign country and until recently you could make a claim from the tax credit system by means of e-mail. However, this is no longer the case. Nowadays of course it is a very difficult thing to walk into a bank and commit a fraud without showing your face because everywhere there is CCTV, you can’t move in this country for CCTV."
I said, you can thank the security profession for that! Roy laughed and went on: "I think it is the most wonderful thing that has happened. It solves murders, it solves terrorist raids etc; it is the greatest advantage ever but of course what is now happening is, that you can avoid all that by using electronic means to commit crimes. You don’t ever have to show your face, you don’t even need to be in this country, although I think a lot are, but you can do it from anywhere in the world."
How are the ‘fiscal warriors’ going to combat this type of crime and how can you make it fool proof? I asked.
"We live in a free country, an advanced democracy, a country in which we survive because of trade and we probably survive because trade is less bureaucratic and easier here than in many other countries, so it is easy to understand why we must have a VAT systems which is non-bureaucratic. We would never want a company to go to the wall for want of cash flow caused by the Government’s tax system, so it is made to be easily accessed, to suit the needs of the vast majority that act honestly. But organised crime has recognised that in that openness there is an opportunity. It is the same with the tax credit system, we wouldn’t want to be in a country where the poor are starving in the streets, so if there is a need for money people can get it quickly. This whole system has been made to make it quick and easy to operate but organised crime has recognised the vulnerability. Our challenge is to retain openness and ease of use whilst making sure that we can use intelligence and get the evidence to bring to justice those criminals."
Getting worse?
I asked Roy if he saw it getting worse. "I think it may get worse before it gets better. What we need is to have a year or two of really successful prosecutions." How are you looking to combat it, I asked. He said: "For the first time, Revenue and Customs have the ability to concentrate entirely on those organised criminals who attack the tax systems. The passing of the narcotics war, which really dominated Customs, to another agency, has really freed us up to enable us to concentrate on people who attack the tax system. We are also bringing all the skills, knowledge and experience of those long battles against the narcotics importers to bear against the organised criminals who attack the tax system. So we will be using all the modern surveillance tactical opportunities that we have been using against drug dealers. I also think that we will increase in size – I have a bid in for more people because the problem is so real and I am confident the organisation will grow from 1500 to 1600 people to 2000 over the next few years. We are probably chasing around somewhere is excess of £5bn a year going out to serious criminals and organised crime, so the £100m that we cost is but a drop in the ocean. But of course we do not operate in isolation, there are many others involved including those uniformed guards that you may encounter as you come through Heathrow or Dover stopping the lorries as they come out of the tunnels.
"They are the equivalent to the uniformed PC, we are the CID if you like, so if they catch somebody they call us in to investigate. They have developed techniques to profile people and although it may seem random it is not! They certainly know what they’re doing. If they do actually stop someone and find something then they will call in the investigators because it will probably require evidence to be gathered which will require particular skills to follow it through. We also do controlled deliveries because it is not just the lorry driver that interests us but the person who puts up the money, the controlling mind behind this huge lorry load of cigarettes. Almost on a daily basis now we are stopping not just the ‘white van man’ in his transit with cigarettes – but these huge lorries which undermine the budget. When the Chancellor works out his budget he knows how many cigarettes are smoked in this country and he taxes them and if somehow organised crime undermines that, then that is another hit on the money that we would expect to be spent."
I find myself having initially perceived the tax collector to be resented to wanting to get on board and become a ‘fiscal warrior’. I asked Roy; what next? He said: "I think we are stepping forward now and we will be successful in overcoming this with the recognition of the problem of organised attacks on the system and part of this is changing public perception. It is not a victimless crime; we are the victims of this crime."
Not wanting to be a victim of anything, I am converted. I asked about the publicity that this type of work will attract. Roy said: "One of the most frustrating parts is that you can be successful, yet nobody ever knows about it because it doesn’t make the front page headlines. I had a very interesting career with the police force but I find that this job has a real excitement about it, with unique challenges and opportunities. We are going to be working very closely with SOCA and the police and need information wherever we can get it, particularly about the people that are stealing our identities. This is probably the greatest threat to us all. People who read your magazine will be conscious of the fact that personal data of their staff and their records are extremely valuable commodities to organised crime. So there is help we need in closing down those areas and anything that the security industry can do to assist will make life more difficult for the terrorist and other organised criminals."
